UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June ~~29, 2019~~27, 2020



☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-14041

HAEMONETICS ~~CORPORATION~~CORPORATION

(Exact name of registrant as specified in its charter)

Massachusetts

04-2882273

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

~~400 Wood Road~~125 Summer Street

~~Braintree~~Boston,

Massachusetts

02110

~~Massachusetts~~

~~02184-9114~~

(Address of principal executive offices)

(Zip Code)

(~~781~~) (781) 848-7100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Common stock, $.01 par value per share

HAE

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes ☐No x

The number of shares of $0.01 par value common stock outstanding as of ~~August 2, 2019: 50,769,875~~July 31, 2020: 50,699,118

HAEMONETICS CORPORATION

INDEX



			PAGE
PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

Unaudited Condensed Consolidated Statements of ~~Loss~~ Income (Loss) and Comprehensive ~~Loss~~Income (Loss) - Three Months Ended June 27, 2020 and June 29, 2019 ~~and June 30, 2018~~			3
Unaudited Condensed Consolidated Balance Sheet - June ~~29, 2019~~27, 2020 and Audited Consolidated Balance Sheet - March ~~30, 2019~~28 , 2020			4
Unaudited Condensed Consolidated ~~Statement~~Statements of Stockholders' Equity - Three Months Ended June 27, 2020 and June 29, 2019 ~~and June 30, 2018~~			5
Unaudited Condensed Consolidated Statements of Cash Flows - Three Months ~~Ended~~Ende d June 27, 2020 and June 29, 2019 ~~and June 30, 2018~~			6
Notes to Unaudited Condensed Consolidated Financial Statements			7

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			2120

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk			30

ITEM 4. Controls and Procedures			3031

PART II. OTHER INFORMATION			3132

ITEM 1. Legal Proceedings			3132

ITEM 1A. Risk Factors			3132

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds			3132

ITEM 3. Defaults upon Senior Securities			3133

ITEM 4. Mine Safety Disclosures			3133

ITEM 5. Other Information			3133

ITEM 6. Exhibits			3234

SIGNATURES			3335

ITEM 1. FINANCIAL STATEMENTS

HAEMONETICS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~LOSS~~INCOME (LOSS) AND COMPREHENSIVE ~~LOSS~~INCOME (LOSS)

(Unaudited in thousands, except per share data)


	Three Months Ended							Three Months Ended
	June 29, 2019			June 30, 2018				June 27, 2020		June 29, 2019
Net revenues	$	238,451		$	229,347		Net revenues	$	195,577	$	238,451
Cost of goods sold	122,545			146,103			Cost of goods sold	105,547		122,545
Gross profit	115,906			83,244			Gross profit	90,030		115,906
Operating expenses:							Operating expenses:
Research and development	7,487			9,406			Research and development	7,750		7,487
Selling, general and administrative	73,000			68,545			Selling, general and administrative	69,537		73,000
Impairment of assets	48,721			—			Impairment of assets	1,028		48,721
Total operating expenses	129,208			77,951			Total operating expenses	78,315		129,208
Operating (loss) income	(13,302		)	5,293
Operating income (loss)							Operating income (loss)	11,715		(13,302)
Interest and other expense, net	(4,423		)	(1,978		)	Interest and other expense, net	(3,735)		(4,423)
(Loss) income before (benefit) provision for income taxes	(17,725		)	3,315
(Benefit) provision for income taxes	(9,246		)	6,134
Net loss	$	(8,479	)	$	(2,819	)
Income (loss) before provision for income taxes							Income (loss) before provision for income taxes	7,980		(17,725)
Benefit for income taxes							Benefit for income taxes	(2,547)		(9,246)
Net income (loss)							Net income (loss)	$	10,527	$	(8,479)

Net loss per share - basic and diluted	$	(0.17	)	$	(0.05	)
Net income (loss) per share - basic							Net income (loss) per share - basic	$	0.21	$	(0.17)
Net income (loss) per share - diluted							Net income (loss) per share - diluted	$	0.21	$	(0.17)

Weighted average shares outstanding							Weighted average shares outstanding
Basic and diluted	51,010			52,119
Basic							Basic	50,418		51,010
Diluted							Diluted	51,247		51,010

Comprehensive loss	$	(12,097	)	$	(7,538	)
Comprehensive income (loss)							Comprehensive income (loss)	$	11,956	$	(12,097)

The accompanying notes are an integral part of these condensed consolidated financial statements.

HAEMONETICS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(InUnaudited in thousands, except share data)


	June 27, 2020		March 28, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	275,725	$	137,311
Accounts receivable, less allowance of $3,446 at June 27, 2020 and $3,824 at March 28, 2020	141,094		165,207
Inventories, net	294,510		270,276
Prepaid expenses and other current assets	48,081		30,845
Total current assets	759,410		603,639
Property, plant and equipment, net	242,969		253,399
Intangible assets, less accumulated amortization of $299,039 at June 27, 2020 and $296,942 at March 28, 2020	137,520		133,106
Goodwill	217,298		210,652
Deferred tax asset	4,088		3,930
Other long-term assets	71,888		62,384
Total assets	$	1,433,173	$	1,267,110
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable and current maturities of long-term debt	$	231,364	$	76,980
Accounts payable	48,459		50,730
Accrued payroll and related costs	36,409		49,471
Other liabilities	91,595		97,641
Total current liabilities	407,827		274,822
Long-term debt, net of current maturities	296,893		305,513
Deferred tax liability	13,116		10,562
Other long-term liabilities	106,768		89,104
Total stockholders’ equity
Common stock, $0.01 par value; Authorized — 150,000,000 shares; Issued and outstanding — 50,671,442 shares at June 27, 2020 and 50,322,930 shares at March 28, 2020	507		503
Additional paid-in capital	562,729		553,229
Retained earnings	89,039		78,512
Accumulated other comprehensive loss	(43,706)		(45,135)
Total stockholders’ equity	608,569		587,109
Total liabilities and stockholders’ equity	$	1,433,173	$	1,267,110

June 29,
2019 March 30,
2019
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 190,234
$ 169,351
Accounts receivable, less allowance of $3,624 at June 29, 2019 and $3,937 at March 30, 2019 163,339
185,027
Inventories, net 221,953
194,337
Prepaid expenses and other current assets 39,752
27,406
Total current assets 615,278
576,121
Property, plant and equipment, net 276,748
343,979
Intangible assets, less accumulated amortization of $271,769 at June 29, 2019 and $263,479 at March 30, 2019 120,340
127,693
Goodwill 211,140
210,819
Deferred tax asset 4,622
4,359
Other long-term assets 31,482
11,796
Total assets $ 1,259,610
$ 1,274,767
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable and current maturities of long-term debt $ 117,548
$ 27,666
Accounts payable 60,792
63,361
Accrued payroll and related costs 31,352
53,200
Other liabilities 83,973
91,532
Total current liabilities 293,665
235,759
Long-term debt, net of current maturities 318,144
322,454
Deferred tax liability 14,006
19,906
Other long-term liabilities 42,829
28,780
Total stockholders’ equity
Common stock, $0.01 par value; Authorized — 150,000,000 shares; Issued and outstanding — 50,771,013 shares at June 29, 2019 and 51,019,918 shares at March 30, 2019 508
510
Additional paid-in capital 525,038
536,320
Retained earnings 99,418
161,418
Accumulated other comprehensive loss (33,998 ) (30,380 )
Total stockholders’ equity 590,966
667,868
Total liabilities and stockholders’ equity $ 1,259,610
$ 1,274,767

The accompanying notes are an integral part of these condensed consolidated financial statements.

HAEMONETICS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited in thousands)


	Common Stock					Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Shares	Par Value
Balance, March 28, 2020	50,323	$	503	$	553,229	$	78,512	$	(45,135)	$	587,109
Employee stock purchase plan	22	—		2,144		—		—		2,144
Exercise of stock options	28	1		1,192		—		—		1,193

Issuance of restricted stock, net of cancellations	298	3		(3)		—		—		—
Share-based compensation expense	—	—		6,167		—		—		6,167

Net income	—	—		—		10,527		—		10,527
Other comprehensive income	—	—		—		—		1,429		1,429
Balance, June 27, 2020	50,671	$	507	$	562,729	$	89,039	$	(43,706)	$	608,569


	Common Stock					Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Shares	Par Value
Balance, March 30, 2019	51,020	$	510	$	536,320	$	161,418	$	(30,380)	$	667,868
Employee stock purchase plan	25	—		1,830		—		—		1,830
Exercise of stock options	85	1		3,634		—		—		3,635
Shares repurchased	(616)	(6)		(21,473)		(53,521)		—		(75,000)
Issuance of restricted stock, net of cancellations	257	3		(3)		—		—		—
Share-based compensation expense	—	—		4,730		—		—		4,730

Net loss	—	—		—		(8,479)		—		(8,479)
Other comprehensive loss	—	—		—		—		(3,618)		(3,618)
Balance, June 29, 2019	50,771	$	508	$	525,038	$	99,418	$	(33,998)	$	590,966

The accompanying notes are an integral part of these condensed consolidated financial statements.

HAEMONETICS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED ~~STATEMENT~~STATEMENTS OF ~~STOCKHOLDERS’ EQUITY~~CASH FLOWS

(Unaudited in ~~thousands, except share data)~~thousands)


	Three Months Ended
	June 27, 2020		June 29, 2019
Cash Flows from Operating Activities:
Net income (loss)	$	10,527	$	(8,479)
Adjustments to reconcile net income to net cash provided by operating activities:
Non-cash items:
Depreciation and amortization	20,724		27,437
Impairment of assets	1,028		48,721
Share-based compensation expense	6,167		4,730
Deferred tax benefit	(501)		(5,309)
Provision for losses on accounts receivable and inventory	1,193		(1,378)

Other non-cash operating activities	66		50
Change in operating assets and liabilities:
Change in accounts receivable	25,067		22,518
Change in inventories	(24,557)		(37,414)
Change in prepaid income taxes	(3,544)		(3,228)
Change in other assets and other liabilities	865		(8,208)
Change in accounts payable and accrued expenses	(25,223)		(36,812)
Net cash provided by operating activities	11,812		2,628
Cash Flows from Investing Activities:
Capital expenditures	(7,696)		(8,249)
Acquisition	(16,606)		—
Proceeds from divestiture	—		9,808
Proceeds from sale of property, plant and equipment	406		302
Net cash (used in) provided by investing activities	(23,896)		1,861
Cash Flows from Financing Activities:
Net increase in short-term loans	150,000		90,000
Repayment of term loan borrowings	(4,375)		(4,375)
Share repurchases	—		(75,000)
Proceeds from employee stock purchase plan	2,144		1,830
Proceeds from exercise of stock options	1,193		3,635
Other	(11)		—
Net cash provided by financing activities	148,951		16,090
Effect of exchange rates on cash and cash equivalents	1,547		304
Net Change in Cash and Cash Equivalents	138,414		20,883
Cash and Cash Equivalents at Beginning of Period	137,311		169,351
Cash and Cash Equivalents at End of Period	$	275,725	$	190,234
Supplemental Disclosures of Cash Flow Information:
Interest paid	$	2,780	$	3,535
Income taxes paid	$	2,063	$	3,078
Non-Cash Investing and Financing Activities:
Transfers from inventory to fixed assets for placement of Haemonetics equipment	$	2,364	$	2,973

Common Stock
Additional
Paid-in Capital
Retained Earnings
Accumulated
Other
Comprehensive Loss

Total
Stockholders’ Equity
Shares Par Value
Balance, March 30, 2019 51,020
$ 510
$ 536,320
$ 161,418
$ (30,380 ) $ 667,868
Employee stock purchase plan 25
—
1,830
—
—
1,830
Exercise of stock options 85
1
3,634
—
—
3,635
Shares repurchased (616 ) (6 ) (21,473 ) (53,521 ) —
(75,000 )
Issuance of restricted stock, net of cancellations 257
3
(3 ) —
—
—
Share-based compensation expense —
—
4,730
—
—
4,730
Net loss —
—
—
(8,479 ) —
(8,479 )
Other comprehensive loss —
—
—
—
(3,618 ) (3,618 )
Balance, June 29, 2019 50,771
$ 508
$ 525,038
$ 99,418
$ (33,998 ) $ 590,966

Common Stock
Additional
Paid-in Capital
Retained Earnings
Accumulated
Other
Comprehensive Loss

Total
Stockholders’ Equity
Shares Par Value
Balance, March 31, 2018 52,343
$ 523
$ 503,955
$ 266,942
$ (18,991 ) $ 752,429
Employee stock purchase plan 45
1
1,779
—
—
1,780
Exercise of stock options 75
1
2,830
—
—
2,831
Shares repurchased (888 ) (9 ) (4,552 ) (75,439 ) —
(80,000 )
Issuance of restricted stock, net of cancellations 67
—
—
—
—
—
Share-based compensation expense —
—
3,379
—
—
3,379
Cumulative effect of change in accounting standards —
—
—
1,177
—
1,177
Net loss —
—
—
(2,819 ) —
(2,819 )
Other comprehensive loss —
—
—
—
(4,719 ) (4,719 )
Balance, June 30, 2018 51,642
$ 516
$ 507,391
$ 189,861
$ (23,710 ) $ 674,058

The accompanying notes are an integral part of these condensed consolidated financial statements.

~~HAEMONETICS CORPORATION AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(Unaudited in thousands)~~

Three Months Ended
June 29,
2019 June 30,
2018
Cash Flows from Operating Activities:
Net loss $ (8,479 ) $ (2,819 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Non-cash items:
Depreciation and amortization 27,437
26,415
Impairment of assets 48,721
21,170
Share-based compensation expense 4,730
3,379
Deferred tax benefit (5,309 ) —
Provision for losses on accounts receivable and inventory (1,378 ) (352 )
Other non-cash operating activities 50
19
Change in operating assets and liabilities:
Change in accounts receivable 22,518
(1,577 )
Change in inventories (37,414 ) (15,058 )
Change in prepaid income taxes (3,228 ) 72
Change in other assets and other liabilities (8,208 ) (1,214 )
Change in accounts payable and accrued expenses (36,812 ) (6,913 )
Net cash provided by operating activities 2,628
23,122
Cash Flows from Investing Activities:
Capital expenditures (8,249 ) (27,514 )
Proceeds from divestiture 9,808
—
Proceeds from sale of property, plant and equipment 302
250
Net cash provided by (used in) investing activities 1,861
(27,264 )
Cash Flows from Financing Activities:
Net increase in short-term loans 90,000
—
Term loan borrowings —
347,780
Repayment of term loan borrowings (4,375 ) (253,728 )
Proceeds from employee stock purchase plan 1,830
1,780
Proceeds from exercise of stock options 3,635
2,831
Share repurchases (75,000 ) (80,000 )
Net cash provided by financing activities 16,090
18,663
Effect of exchange rates on cash and cash equivalents 304
(2,584 )
Net Change in Cash and Cash Equivalents 20,883
11,937
Cash and Cash Equivalents at Beginning of Period 169,351
180,169
Cash and Cash Equivalents at End of Period $ 190,234
$ 192,106
Supplemental Disclosures of Cash Flow Information:
Interest paid $ 3,535
$ 2,361
Income taxes paid $ 3,078
$ 1,817
Transfers from inventory to fixed assets for placement of Haemonetics equipment $ 2,973
$ 1,799

~~The accompanying notes are an integral part of these consolidated financial statements.~~

HAEMONETICS CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Haemonetics Corporation ("Haemonetics" or the "Company") presented herein have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of the Company's management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. All intercompany transactions have been eliminated. Operating results for the three months ended June ~~29, 2019~~27, 2020 are not necessarily indicative of the results that may be expected for the full fiscal year ending ~~March 28, 2020~~April 3, 2021 or any other interim period. The Company has assessed its ability to continue as a going concern. As of June ~~29, 2019,~~27, 2020, the Company has concluded that substantial doubt about its ability to continue as a going concern does not exist. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes included in the annual report on Form 10-K for the fiscal year ended March ~~30, 2019.~~28, 2020.

The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the financial statements to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. ~~Subsequent events have been evaluated as required.~~Refer to Note 5, Divestitures and to Note 11, Notes Payable and Long-Term Debt, for information pertaining to three divestitures and a payment on the Company's revolving credit facility, respectively, that occurred subsequent to June 27, 2020. There were no other material recognized or unrecognized subsequent events as of ~~and~~or for the three months ended June ~~29, 2019.~~

27, 2020.

2. RECENT ACCOUNTING PRONOUNCEMENTS

Standards Implemented

In ~~February~~June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Codification ("ASC") Update No. ~~2016-02,~~2016-13, ~~Leases~~Financial Instruments – Credit Losses (Topic ~~842)~~326). ASC Update No. ~~2016-02~~2016-13 is intended to ~~increase~~replace the ~~transparency~~current incurred loss impairment methodology for financial assets measured at amortized cost with a methodology that reflects expected credit losses and ~~comparability among organizations by recognizing lease asset~~requires consideration of a broader range of reasonable and ~~lease liabilities on the balance sheet,~~supportable information, including ~~those previously classified as operating leases under current U.S. GAAP and disclosing key~~forecasted information, ~~about leasing arrangements. In July 2018, the FASB issued an update~~ to the leasing guidance to allow an additional transition option which would allow companies to adopt the standard as of the beginning of the year of adoption as opposed to the earliest comparative period presented. The Company adopted the new standard on March 31, 2019.

Upon transition, the Company applied the package of practical expedients permitted under ASC Update No. 2016-02 transition guidance to its entire lease portfolio at March 31, 2019. As a result, the Company is not required to reassess (i) whether any expired or existing contracts are or contain leases, (ii) the classification of any expired or existing leases, and (iii) initial direct costs for any existing leases. The Company also elected to account for each lease component and the associated non-lease components as a single lease component and also elected not to recognize a lease liability or right-of-use asset for any lease that, at commencement date, has a lease term of 12 months or less and does not include an option to purchase the underlying asset that the Company is reasonably certain to exercise.

As a result of adopting ASC Update No. 2016-02, the Company recognized additional right-of-use assets of $22.9 million and corresponding liabilities of $22.7 million for its existing lease portfolio on the consolidated balance sheets, with no material impact to the consolidated statements of operations or consolidated statements of cash flows. Additionally, the Company implemented a new lease administration and lease accounting system and has updated controls and procedures for maintaining and accounting for its lease portfolio under the new standard.

In March 2017, the FASB issued ASC Update No. 2017-07, Compensation - Retirement Benefits (Topic 715). The guidance revises the presentation of net periodic pension cost and net periodic post-retirement benefit cost.develop credit loss estimates. The Company adopted ASC Update No. ~~2017-07~~2016-13 during the first quarter of fiscal ~~2020.~~2021. The adoption ~~of ASC Update No. 2017-07~~ did not have a material impact on the Company's unaudited condensed consolidated financial statements.

In ~~June~~August 2018, the FASB issued ASC Update No. ~~2018-07, Compensation~~2018-15, Intangibles, Goodwill and Other - ~~Stock Compensation (Topic 718)~~Internal-Use Software (Subtopic 350-40). The new guidance aligns the accounting ~~for non-employee share-based payments~~implementation costs incurred in a cloud computing arrangement that is a service contract with the ~~existing employee share-based transactions guidance.~~

accounting for internal-use software licenses. The Company adopted ASC Update No. ~~2018-07~~2018-15 during the first quarter of fiscal ~~2020.~~2021. The ~~impact of adopting ASC Update No. 2018-07~~adoption did not have a material impact on the Company's unaudited condensed consolidated financial ~~position and results of operations.~~

statements.

3. RESTRUCTURING

On an ongoing basis, the Company reviews the global economy, the healthcare industry, and the markets in which it competes to identify opportunities for efficiencies, enhance commercial capabilities, align its resources and offer its customers better solutions. In order to realize these opportunities, the Company undertakes restructuring-type activities to transform its business.

In July 2019, the Board of Directors of the Company approved a new Operational Excellence Program (the "2020 Program") and delegated authority to the Company's management to determine the detail of the initiatives that will comprise the program. The 2020 Program is designed to improve operational performance and reduce cost principally in our manufacturing and supply chain operations. The Company estimates that it will incur aggregate charges between $60 million and $70 million in connection with the 2020 Program. These charges, the majority of which will result in cash outlays, including severance and other employee costs, will be incurred as the specific actions required to execute these initiatives are identified and approved and are expected to be substantially completed by the end of fiscal 2023. ~~Savings from~~During the three months ended June 27, 2020, ~~Program~~the Company incurred $3.5 million of restructuring and turnaround costs under this program. Total cumulative charges under this program are ~~targeted to reach $80 million to $90 million on an annualized basis once~~$15.4 million. There were no restructuring and turnaround costs incurred during the ~~program is completed.~~three months ended June 29, 2019 under this program.

During fiscal 2018, the Company launched a Complexity Reduction Initiative (the "2018 Program"), a company-wide restructuring program designed to improve operational performance and reduce cost, freeing up resources to invest in accelerated growth. During the three months ended June ~~29, 2019~~27, 2020 and June ~~30, 2018,~~29, 2019, the Company incurred $0.5 million and $2.0 million, ~~and $3.4 million~~respectively, of restructuring and turnaround costs under this ~~program, respectively.~~program. Total cumulative charges under this program are ~~$52.3~~$58.7 million. The 2018 Program is substantially complete.

The following table summarizes the activity for restructuring reserves related to the 2020 Program and the 2018 and Prior Programs for the three months ended June ~~29, 2019,~~27, 2020, substantially all of which relates to employee severance and other employee costs:


(In thousands)	2020 Program		2018 and Prior Programs		Total
Balance at March 28, 2020	$	1,136	$	1,512	$	2,648
Costs incurred, net of reversals	1,166		(101)		1,065
Payments	(541)		(633)		(1,174)

Balance at June 27, 2020	$	1,761	$	778	$	2,539

(In thousands) 2018 Program and Prior Programs
Balance at March 30, 2019 $ 7,479
Costs incurred, net of reversals 969
Payments (3,206 )
Balance at June 29, 2019 $ 5,242

The ~~substantial majority of~~following presents the restructuring costs ~~during the three months ended June 29, 2019 have been included as a component of selling, general and administrative expenses in the~~by line item within our accompanying unaudited condensed consolidated statements of ~~loss.~~ income (loss) and comprehensive income (loss):


	Three Months Ended
(In thousands)	June 27, 2020		June 29, 2019
Cost of goods sold	$	503	$	159
Research and development	319		14
Selling, general and administrative expenses	243		796
	$	1,065	$	969

As of June ~~29, 2019,~~27, 2020, the Company had a restructuring liability of ~~$5.2~~$2.5 million, of which ~~$4.5~~$2.1 million is payable within the next twelve months.

In addition to the restructuring costs included in the table above, ~~during the three months ended June 29, 2019 and June 30, 2018,~~ the Company also incurred costs of ~~$1.1~~$2.9 million ~~and $3.6 million, respectively,~~ that do not constitute restructuring under ASC 420, Exit and Disposal Cost Obligations, and which the Company instead refers to as turnaround costs. These costs ~~substantially all of which have been included as a component of selling, general and administrative expenses in the accompanying consolidated statements of loss,~~ consist primarily of expenditures directly related to the restructuring actions and include program management costs associated with the ~~implementation of outsourcing initiatives~~2020 Program and ~~recent accounting standards.~~operational performance improvement initiatives.

The tables below present restructuring and turnaround costs by ~~the Company's three~~ reportable ~~segments as well as the Company's other corporate restructuring and turnaround costs:~~segment:


Restructuring costs	Three Months Ended
(In thousands)	June 27, 2020		June 29, 2019
Plasma	$	568	$	153
Blood Center	154		42
Hospital	129		203
Corporate	214		571
Total	$	1,065	$	969

Turnaround costs	Three Months Ended
(In thousands)	June 27, 2020		June 29, 2019
Plasma	$	—	$	48
Blood Center	16		—
Hospital	9		—
Corporate	2,910		1,010
Total	$	2,935	$	1,058

Total restructuring and turnaround costs	$	4,000	$	2,027

Restructuring costs Three Months Ended
(In thousands) June 29, 2019 June 30, 2018
Plasma $ 153
$ (39 )
Blood Center 42
(32 )
Hospital 203
6
Corporate 571
(227 )
Total $ 969
$ (292 )

Turnaround costs Three Months Ended
(In thousands) June 29, 2019 June 30, 2018
Plasma $ 48
$ 12
Blood Center —
—
Hospital —
(71 )
Corporate 1,010
3,700
Total $ 1,058
$ 3,641

Total restructuring and turnaround costs $ 2,027
$ 3,349

4. ACQUISITION

~~4. DIVESTITURE~~

On April 1, 2020, the Company acquired all of the outstanding equity of enicor GmbH ("enicor"), the manufacturer of ClotPro^®, a new generation whole blood coagulation testing system that is currently available in select European and Asia Pacific markets, for total consideration of $20.5 million, which consisted of upfront payments of $16.6 million and the fair value of contingent consideration of $3.9 million. The contingent consideration, which could total a maximum of $4.5 million, consists of payments related to the achievement of certain revenue and regulatory milestones. The acquisition of this viscoelastic diagnostic device augments the Company's portfolio of hemostasis analyzers within the Hospital business unit.

Purchase Price Allocation

The Company accounted for the acquisition of enicor GmbH as a business combination, and in accordance with FASB ASC Topic 805, Business Combinations (Topic 805), recorded the assets acquired and liabilities assumed at their respective fair values as of the acquisition date. The final determination of the fair value of certain assets and liabilities will be completed within the measurement period as required by Topic 805. As of June 27, 2020, the valuation studies necessary to determine the fair market value of the assets acquired and liabilities assumed are preliminary, including the projection of the underlying cash flows used to determine the fair value of the identified tangible, intangible and financial assets and liabilities.

The following amounts represent the preliminary determination of the fair value of the identifiable assets acquired and liabilities assumed for enicor completed during the first three months of fiscal 2021:


(In thousands)	June 27, 2020

Inventory	$	634
Other current assets	685
Property, plant and equipment	289
Intangible assets	14,090
Goodwill	8,153
Total assets acquired	$	23,851
Other current liabilities	289
Contingent consideration (current)	504
Contingent consideration (non-current)	3,416
Deferred tax liability	3,036
Total liabilities assumed	$	7,245
Net assets acquired	$	16,606

The Company determined the identifiable intangible assets were completed technology, customer relationships and trademark. The fair value of the intangible assets was estimated using the income approach, and the cash flow projections were discounted using a rate of 20%. The cash flows were based on estimates used to price the transaction, and the discount rates applied were benchmarked with reference to the implied rate of return from the transaction model and the weighted average cost of capital. The benefits of adding a viscoelastic diagnostic device to the Company’s portfolio of hemostasis analyzers within the Hospital business unit contributed to an acquisition price in excess of the fair value of net assets acquired for enicor, which resulted in the establishment of goodwill. In addition, the benefits of lower cost manufacturing and complementary sales channels also contributed to the establishment of goodwill for this acquisition. None of the goodwill is expected to be deductible for income tax purposes.

Intangible assets acquired consist of the following:


(In thousands)	Amount		Weighted-Average Amortization Period
Completed technology	$	13,441	10
Customer relationships	347		10
Trademark	302		10
Total	$	14,090	10

Acquisition-Related Costs

The amount of acquisition-related costs incurred associated the acquisition was $0.2 million for three months ended June 27, 2020.

Unaudited Pro Forma Financial Information

enicor had an immaterial impact to the Company's net sales and net income for the period post acquisition through June 27, 2020. The unaudited estimated pro forma impact of the results of the acquisition of enicor as if it was consummated on March 29, 2020 are immaterial.

5. DIVESTITURES

Subsequent to the first quarter, which ended on June 27, 2020, the Company completed or announced the following divestitures.

Fajardo, Puerto Rico Manufacturing Operations

On ~~May 21, 2019,~~June 29, 2020, the Company ~~transferred~~sold its Fajardo, Puerto Rico, manufacturing operations to ~~CSL Plasma Inc. (“CSL”~~GVS, S.p.A ("GVS") ~~substantially~~, a leading provider of advanced filtration solutions for critical applications for $15.5 million ($8.1 million, net of cash transferred). Under the terms of the agreement, Haemonetics retained all ofintellectual property rights to its ~~tangible assets held relating to the manufacture of anti-coagulant and saline (together, “Liquids”)~~proprietary blood filters currently manufactured at its ~~Union, South Carolina~~Fajardo facility ~~(“Union”), which consist~~and GVS acquired certain assets consisting primarily of property, plant and equipment, ~~and~~ inventory and ~~CSL~~cash and has assumed certain related liabilities (the “Asset Transfer”) pursuant to the terms of a settlement, release and asset transfer agreement between the parties dated May 13, 2019. The Asset Transfer excludes all other assets related to Union, including accounts receivable, customer contracts and the Company's U.S. Food and Drug Administration (“FDA”) product approvals for manufacturing Liquids.

~~At closing, Haemonetics received $9.8 million of proceeds for the Asset Transfer and was concurrently released from its obligations to supply Liquids under a 2014 supply agreement with CSL.~~liabilities. In connection with this transaction, the ~~Asset Transfer, CSL~~Company and ~~Haemonetics~~GVS also entered into ~~related transition services,~~a long-term supply and ~~manufacturing services and quality agreements~~development agreement that, among other things, ~~permit CSL~~grants GVS exclusive rights to manufacture ~~Liquids under~~and supply the ~~Company's FDA product approvals, exclusively~~blood filters currently produced at the Fajardo facility for ~~Haemonetics and CSL, until CSL obtains independent product approvals from the FDA to manufacture the Liquids.~~

Haemonetics. The Company ~~will continue~~also agreed to ~~supply Liquids~~provide certain transition services to ~~its customers following~~GVS, generally for a period of up to three months depending on the ~~Asset Transfer pursuant to its supplier arrangements with contract manufacturers.~~nature of the service.

~~In connection with the Company's and CSL's entry in to the May 13, 2019 agreement for the Asset Transfer, the Company~~As a result of this transaction, Haemonetics recognized a pre-tax impairment charge of ~~$48.7~~$1.0 million in the first quarter of fiscal ~~2020, primarily related to~~2021, as the carrying ~~balances~~value of the assets and liabilities in the asset transfer exceeded the net of the $15.5 million of cash proceeds and the expected costs to sell of $1.5 million. As of June 27, 2020, $7.6 million of assets, consisting of the property, plant and equipment ~~exceeding~~included in the transaction and goodwill, were treated as assets held for sale and reclassified to other current assets.

U.S. Blood Donor Management Software

On July 1, 2020, the Company sold certain U.S. blood donor management software solution assets within its Blood Center business unit to the GPI Group ("GPI") for an upfront cash payment of $14.0 million ($13.6 million, net of working capital adjustments). In addition to the cash received upon closing, the Company could receive up to $14.0 million in additional consideration ~~received under~~contingent on the ~~terms~~achievement of commercial milestones over the twelve month period immediately following the closing of the ~~Agreement.~~transaction. The ~~charge will not result~~Company also agreed to provide certain transition services to GPI, generally for a period of one to nine months depending on the nature of the service. As of June 27, 2020, the intellectual property and certain other related assets, including goodwill, associated with the transferred assets totaling $2.3 million were treated as assets held for sale and reclassified to other current assets.

Inlog Holdings France

On July 23, 2020, the Company entered into a definitive agreement to sell its wholly-owned subsidiary Inlog Holdings France SAS to Abénex Capital ("Abénex"), a private equity firm based in ~~any future cash expenditures.~~

France. Inlog Holdings France SAS, through its subsidiary In Log SAS, develops and sells blood bank and hospital software solutions used predominantly in France and in several other countries outside of the U.S. This transaction is expected to close in the second quarter of fiscal 2021, subject to Abénex's receipt of financing and the satisfaction of other customary closing conditions.

6. INCOME TAXES

The Company conducts business globally and reports its results of operations in a number of foreign jurisdictions in addition to the United States. The Company's reported tax rate is impacted by the jurisdictional mix of earnings in any given period as the foreign jurisdictions in which it operates have tax rates that differ from the U.S. statutory tax rate.

For the three months ended June 27, 2020, the Company reported an income tax benefit of $2.5 million, representing an effective tax rate benefit of 31.9%. The ~~Company's reported~~effective tax rate for the three months ended June 27, 2020 includes discrete tax benefits recognized from excess stock compensation deductions of $4.0 million. The effective tax rates were also impacted by the jurisdictional mix of earnings. During the three months ended June 27, 2020, the Company transferred certain intangible assets amongst its wholly-owned subsidiaries prior to the divestiture of its Fajardo, Puerto Rico manufacturing operations. The tax expense on the intercompany sale and the establishment of deferred tax assets (including the associated valuation allowance impacts) were included in the computation of the annual effective tax rate.

For the three months ended June 29, 2019, ~~was~~the Company reported an income tax benefit of $9.2 million, representing an effective tax rate of 52.2%. The effective tax rate for the three months ended June 29, 2019 iswas higher than the U.S. statutory tax rate primarily due to the jurisdictional mix of earnings, as well as the impact of the divestiture of the Union liquid solutions

operation recorded in pretax income which resulted in a worldwide pretax loss for the quarter.

The tax rate for the three months ended June 29, 2019 ~~also includes~~benefited from a discrete stock compensation windfall benefit of $4.9 million. ~~Refer to Note 4, Divestiture for additional details related to the divestiture of the Union liquid solutions operation.~~

During the three months ended June 29, 2019 and June 30, 2018, the Company reported an income tax benefit of $9.2 million and expense of $6.1 million, respectively. The change in the Company's tax provision for the three months ended June 29, 2019 was primarily due to the divestiture of the plasma liquid solutions operation as well as an increase in stock compensation windfall benefits. The income tax provision for the three months ended June 30, 2018 was primarily attributable to applying the Company’s estimated annual effective tax rate to its year-to-date consolidated income before provision for income taxes, and includes a discrete tax benefit of $1.4 million related to stock compensation windfall tax benefits.

7. EARNINGS PER SHARE ~~(“EPS”)~~

The following table provides a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations.


	Three Months Ended
(In thousands, except per share amounts)	June 27, 2020		June 29, 2019
Basic EPS
Net income (loss)	$	10,527	$	(8,479)
Weighted average shares	50,418		51,010
Basic income (loss) per share	$	0.21	$	(0.17)
Diluted EPS
Net income (loss)	$	10,527	$	(8,479)
Basic weighted average shares	50,418		51,010
Net effect of common stock equivalents	829		—
Diluted weighted average shares	51,247		51,010
Diluted income (loss) per share	$	0.21	$	(0.17)

Three Months Ended
(In thousands, except per share amounts) June 29,
2019 June 30,
2018
Basic EPS
Net loss $ (8,479 ) $ (2,819 )
Weighted average shares 51,010
52,119
Basic loss per share $ (0.17 ) $ (0.05 )
Diluted EPS
Net loss $ (8,479 ) $ (2,819 )
Basic weighted average shares 51,010
52,119
Net effect of common stock equivalents —
—
Diluted weighted average shares 51,010
52,119
Diluted loss per share $ (0.17 ) $ (0.05 )

Basic earnings per share is calculated using the Company's weighted-average outstanding common stock. Diluted earnings per share is calculated using its weighted-average outstanding common stock including the dilutive effect of stock awards as determined under the treasury stock method. For ~~both~~the three months ended June 27, 2020, weighted average shares outstanding, assuming dilution, excludes the impact of 0.5 million anti-dilutive shares. For the three months ended June 29, 2019, ~~and June 30, 2018,~~ the Company recognized a net loss; therefore it excluded the impact of outstanding stock awards from the diluted loss per share calculation as its inclusion would have an anti-dilutive effect.

~~Share Repurchase Program~~

~~In May 2019, the Company's Board of Directors authorized the repurchase of up to $500 million of Haemonetics common shares over the next two years.~~

In early June 2019, the Company entered into an accelerated share repurchase agreement ("ASR") with Citibank N.A. ("Citibank") to repurchase approximately $75.0 million of the Company’s common stock. Pursuant to the terms of the ASR, in June 2019, the Company paid Citibank $75.0 million in cash and received an initial delivery of approximately 0.6 million shares of the Company's common stock based on a closing market price on the New York Stock Exchange on June 3, 2019 of $97.45. This initial delivery of shares represented approximately 80% of the notional amount of the ASR. On July 30, 2019, the ASR was completed and an additional 29,018 shares were delivered upon settlement. The total number of shares repurchased under the ASR was approximately 0.6 million at an average price per share upon final settlement of $116.33.

~~As of August 6, 2019, the total remaining authorization for repurchases of the Company's common stock under the share repurchase program was $425 million.~~

8. REVENUE

~~7. REVENUE~~

The Company's revenue recognition policy is to recognize revenues from product sales, software and services in accordance with ASC Topic 606, Revenue from Contracts with Customers. Revenue is recognized when obligations under the terms of a contract with a customer are satisfied; this occurs with the transfer of control of the Company’s goods or services.

The Company considers revenue to be earned when all of the following criteria are met: it has a contract with a customer that creates enforceable rights and obligations; promised products or services are identified; the transaction price, or the consideration it expects to receive for transferring goods or providing services, is determinable and it has transferred control of the promised items to the customer. A promise in a contract to transfer a distinct good or service to the customer is identified as a performance obligation. A contract’s transaction price is allocated to each performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Some of the Company’s contracts have multiple performance obligations. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation based on the estimated standalone selling prices of the good or service in the contract. For goods or services for which observable standalone selling prices are not available, the Company uses an expected cost plus a margin approach to estimate the standalone selling price of each performance obligation.

As of June ~~29, 2019,~~27, 2020, the Company had ~~$24.9~~$21.9 million of its transaction price allocated to remaining performance obligations related to executed contracts with an original duration of one year or more. The Company expects to recognize approximately ~~58%~~62% of this amount as revenue within the next twelve months and the remaining balance thereafter.

Contract Balances

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the condensed consolidated balance sheets. The difference in timing between billing and revenue recognition primarily occurs in software licensing arrangements, resulting in contract assets and contract liabilities.

As of June ~~29, 2019~~27, 2020 and March ~~30, 2019,~~28, 2020, the Company had contract assets of ~~$8.3~~$6.1 million and ~~$5.6~~$5.0 million, respectively. The change is primarily due to the delay in billings compared to the revenue recognized. Contract assets are classified as other current assets and other long-term assets on the condensed consolidated balance ~~sheet.~~sheets.

As of June ~~29, 2019~~27, 2020 and March ~~30, 2019,~~28, 2020, the Company had contract liabilities of ~~$21.9~~$21.5 million and ~~$20.3~~$20.8 million, respectively. During the three months ended June ~~29, 2019,~~27, 2020, the Company recognized ~~$8.5~~$8.9 million of revenue that was included in the above March ~~30, 2019~~28, 2020 contract liability balance. Contract liabilities are classified as other ~~current~~ liabilities and other long-term liabilities on the condensed consolidated balance ~~sheet.~~

sheets.

~~8. INVENTORIES~~

9. INVENTORIES

Inventories are stated at the lower of cost or market and include the cost of material, labor and manufacturing overhead. Cost is determined using the first-in, first-out method.


(In thousands)	June 27, 2020		March 28, 2020
Raw materials	$	76,224	$	76,867
Work-in-process	11,351		11,021
Finished goods	206,935		182,388
Total inventories	$	294,510	$	270,276

(In thousands) June 29,
2019
March 30,
2019
Raw materials $ 72,556
$ 69,420
Work-in-process 12,546
12,610
Finished goods 136,851
112,307
Total inventories $ 221,953
$ 194,337

10. LEASES

~~9. PROPERTY, PLANT AND EQUIPMENT~~

Lessee Activity

~~In December 2018,~~

During the first quarter of fiscal 2021, the Company entered into a lease for ~~office~~manufacturing space in ~~Boston, MA that~~Clinton, PA. The Company's current manufacturing operations in Leetsdale, PA will ~~serve as~~be relocated. The lease term associated with the new ~~corporate headquarters~~manufacturing facility is 15 years and ~~replace the existing location in Braintree, MA.~~7 months and includes two five year renewal options followed by one four year renewal option. During the first quarter of fiscal 2020, the Company entered into a purchase and sale agreement for the existing corporate headquarters. Accordingly, the Company reclassified $7.6 million of long-term assets associated with the current corporate headquarters to assets held-for-sale as of June 29, 2019. The Company expects the move to Boston will occur in the third quarter of fiscal 2020.

~~During the first quarter of fiscal 2019,~~2021, the Company recorded ~~impairment charges~~a right-of-use asset of ~~$21.2~~$11.3 million ~~which consisted~~and corresponding liabilities of ~~$19.8~~$15.4 million ~~of charges related to the discontinued use~~upon commencement of the HDC filter media manufacturing line and $1.4 million of charges related to non-core and underperforming assets. These impairments were included within cost of goods sold on the consolidated statements of loss and impacted the Blood Center reporting segment.

~~10. GOODWILL AND INTANGIBLE ASSETS~~

~~Subsequent to the annual goodwill impairment test performed~~lease term in ~~the fourth quarter of fiscal 2019, the Company revised the composition of its reportable segments to align with its three global business units, Plasma, Blood Center and Hospital. Refer to Note 15,~~ ~~Segment and Enterprise-Wide Information,~~ ~~for additional information regarding the change in the Company's reportable segments~~.

A reporting unit is defined as an operating segment or one level below an operating segment, referred to as a component. The Company aggregates components within an operating segment that have similar economic characteristics. Consistent with its reportable segments, reporting units for purposes of assessing goodwill impairment have also been reorganized based on business unit and include: Plasma, Blood Center and Hospital.

To determine the amount of goodwill within each of the new reporting units, we reallocated, on a relative fair value basis, $84.0 million of goodwill previously allocated to the former Europe, APAC and Japan reporting units to the new global reporting units.May 2020. In addition, the ~~goodwill previously allocated to the former North America reporting units was reallocated to each new respective global reporting unit.~~Company recorded a $4.1 million lease incentive receivable associated with this lease agreement.

~~The following represents our goodwill balance by new global reportable segment. The prior period information has been restated to conform to the current presentation:~~

(In thousands) Plasma Blood Center Hospital Total
Carrying amount as of March 30, 2019 $ 28,828
$ 37,319
$ 144,672
$ 210,819
Currency translation —
66
255
321
Carrying amount as of June 29, 2019 $ 28,828
$ 37,385
$ 144,927
$ 211,140

11. ~~LEASES~~

~~Lessee Activity~~

The Company has operating leases for office space, land, warehouse and manufacturing space, R&D laboratories, vehicles and certain equipment. Finance leases are not significant. Leases with an initial term of 12 months or less are generally not recorded on the balance sheet and expense for these leases is recognized on a straight-line basis over the lease term. For leases executed in fiscal 2020 and later, the Company accounts for the lease components and the non-lease components as a single lease component. The Company's leases have remaining lease terms of 1 year to approximately 30 years, some of which may include options to extend the leases for up to 10 years and some include options to terminate early. These options have been included in the determination of the lease liability when it is reasonably certain that the option will be exercised. The Company does not have any leases that include residual value guarantees.

The Company determines whether an arrangement is or contains a lease based on the unique facts and circumstances present at the inception of an arrangement. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. For operating leases that commenced prior to the Company's adoption of ASC 842, the Company measured the lease liabilities and right-of-use assets using the incremental borrowing rate as of March 31, 2019. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received.

~~The following table presents supplemental balance sheet information related to the Company's operating leases:~~

(In thousands) June 29,
2019
Assets
Operating lease right-of-use assets in Other long-term assets
$ 21,217
Liabilities
Operating lease liabilities in Other current liabilities
$ 5,554
Operating lease liabilities in Other long-term liabilities
15,293

~~The following table presents the weighted average remaining lease term and discount rate information related to our operating leases:~~



	June 29, 2019
~~Weighted average remaining lease term~~	~~4.8 Years~~
~~Weighted average discount rate~~	~~5.19~~	%

~~During the three months ended June 29, 2019 the Company's operating lease cost was $2.5 million.~~

~~The following table presents supplemental cash flow information related to our operating leases:~~

(In thousands) Three months ended June 29, 2019
Cash paid for amounts included in the measurement of operating lease liabilities
Operating cash flows from operating leases $ 2,051

~~The following table presents the maturities of our operating lease liabilities as of June 29, 2019:~~

Fiscal Year (in thousands)
Operating Leases
2020 (excluding the first quarter of 2020) $ 4,989
2021 5,828
2022 4,229
2023 3,288
2024 1,856
Thereafter 3,594
Total future minimum operating lease payments 23,784
Less: imputed interest (2,937 )
Present value of operating lease liabilities $ 20,847

~~As of June 29, 2019, we have an additional lease for office space of $98.6 million. This lease will commence during fiscal 2020 and has a lease term, including renewal options, of up to 22 years.~~

~~Lessor Activity~~

Assets on the Company's balance sheet classified as Haemonetics equipment primarily consists of medical devices installed at customer sites but owned by Haemonetics. These devices are leased to customers under contractual arrangements that typically include and operating or sales-type lease as well as the purchase and consumption of a certain level of disposable products. Sales-type leases are not significant. Contract terms vary by customer and may include options to terminate the contract or options to extend the contract. Where devices are provided under operating lease arrangements, a substantial majority of the entire lease revenue is variable and subject to subsequent non-lease component (disposable products) sales. The allocation of revenue between the lease and non-lease components is based on stand-alone selling prices. Operating lease revenue represents less than 3 percent of the Company's total net sales.

~~12.~~ NOTES PAYABLE AND LONG-TERM DEBT

On June 15, 2018, the Company entered into a credit agreement with certain lenders which provided for a $350.0 million term loan (the "Term Loan") and a $350.0 million revolving loan (the "Revolving Credit Facility" and together with the Term Loan, the "Credit Facilities"). The Credit Facilities expire on June 15, 2023. Interest on the Credit Facilities is established using LIBOR plus 1.13% - 1.75%, depending on the Company's leverage ratio. Under the Credit Facilities, the Company is required to maintain certain leverage and interest coverage ratios specified in the credit agreement as well as other customary non-financial affirmative and negative covenants. At June ~~29, 2019, $332.5~~27, 2020, $319.4 million was outstanding under the Term Loan with an effective interest rate of ~~3.8%~~1.4% and ~~$105.0~~$210.0 million was outstanding on the Revolving Credit Facility. On July 15, 2020, subsequent to the balance sheet date, the Company reduced its borrowings on the Revolving Credit Facility by $60.0 million. The Company also has ~~$25.8~~$26.2 million of uncommitted operating lines of credit to fund its global operations under which there were no0 outstanding borrowings as of June ~~29, 2019.~~27, 2020.

The Company has required scheduled principal payments of ~~$8.8~~$17.5 million during ~~fiscal 2020, $21.9 million during~~the remainder of fiscal 2021, $17.5 million during fiscal 2022, $214.4 million during fiscal 2023 and $70.0 million ~~thereafter.~~during fiscal 2024.

The Company was in compliance with the leverage and interest coverage ratios specified in the Credit Facilities as well as all other bank covenants as of June ~~29, 2019.~~

27, 2020.

~~13. DERIVATIVES~~

12. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

The Company manufactures, markets and sells its products globally. During the three months ended June ~~29, 2019, 34.4%~~27, 2020, 43.2% of ~~its~~the Company's sales were generated outside the U.S., generally in foreign currencies. The Company also incurs certain manufacturing, marketing and selling costs in international markets in local currency.

Accordingly, earnings and cash flows are exposed to market risk from changes in foreign currency exchange rates relative to the U.S. Dollar, the Company's reporting currency. The Company has a program in place that is designed to mitigate the exposure to changes in foreign currency exchange rates. That program includes the use of derivative financial instruments to minimize, for a period of time, the impact on its financial results from changes in foreign exchange rates. The Company utilizes foreign currency forward contracts to hedge the anticipated cash flows from transactions denominated in foreign currencies, primarily the Japanese Yen and the Euro, and to a lesser extent the Swiss Franc, Australian Dollar, Canadian Dollar and the Mexican Peso. This does not eliminate the impact of the volatility of foreign exchange rates. However, because the Company generally enters into forward contracts one year out, rates are fixed for a one-year period, thereby facilitating financial planning and resource allocation.

Designated Foreign Currency Hedge Contracts

All of the Company's designated foreign currency hedge contracts as of June ~~29, 2019~~27, 2020 and March ~~30, 2019~~28, 2020 were cash flow hedges under ASC 815, Derivatives and Hedging ("ASC 815"). The Company records the effective portion of any change in the fair value of designated foreign currency hedge contracts in other comprehensive income until the related third-party transaction occurs. Once the related third-party transaction occurs, the Company reclassifies the effective portion of any related gain or loss on the designated foreign currency hedge contracts to earnings. In the event the hedged forecasted transaction does not occur, or it becomes probable that it will not occur, the Company would reclassify the amount of any gain or loss on the related cash flow hedge to earnings at that time. The Company had designated foreign currency hedge contracts outstanding in the contract amount of ~~$66.4~~$67.5 million as of June ~~29, 2019~~27, 2020 and ~~$81.5~~$93.8 million as of March ~~30, 2019.~~28, 2020. At June ~~29, 2019,~~27, 2020, a gain of ~~$0.7~~$1.9 million, net of tax, will be reclassified to earnings within the next twelve months. Substantially all currency cash flow hedges outstanding as of June ~~29, 2019~~27, 2020 mature within twelve months.

Non-Designated Foreign Currency Contracts

The Company manages its exposure to changes in foreign currency on a consolidated basis to take advantage of offsetting transactions and balances. It uses foreign currency forward contracts as a part of its strategy to manage exposure related to foreign currency denominated monetary assets and liabilities. These foreign currency forward contracts are entered into for periods consistent with currency transaction exposures, generally one month. They are not designated as cash flow or fair value hedges under ASC 815. These forward contracts are marked-to-market with changes in fair value recorded to earnings. The Company had non-designated foreign currency hedge contracts under ASC 815 outstanding in the contract amount of ~~$82.1~~$131.7 million as of June ~~29, 2019~~27, 2020 and ~~$37.4~~$98.0 million as of March ~~30, 2019.~~28, 2020.

Interest Rate Swaps

On June 15, 2018, the Company entered into Credit Facilities which provided for a $350.0 million Term Loan and a $350.0 million Revolving Credit Facility. Under the terms of the Credit Facilities, interest is established using LIBOR plus 1.13% - 1.75%. As a result, the Company's earnings and cash flows are exposed to interest rate risk from changes to LIBOR. Part of the Company's interest rate risk management strategy includes the use of interest rate swaps to mitigate its exposure to changes in variable interest rates. The Company's objective in using interest rate swaps is to add stability to interest expense and to manage and reduce the risk inherent in interest rate fluctuations.

In August 2018, the Company entered into ~~two~~2 interest rate swap agreements (the "Swaps") to pay an average fixed rate of 2.80% on a total notional value of $241.9 million of debt. As a result of the ~~interest rate swaps,~~Swaps, 70% of the Term Loan previously exposed to interest rate risk from changes in LIBOR ~~are~~is now fixed at a rate of 4.05%. The Swaps mature on June 15, 2023. The Company designated the Swaps as cash flow hedges of variable interest rate risk associated with ~~$332.5~~$345.6 million of indebtedness. For the three months ended June ~~29, 2019,~~27, 2020, a loss of ~~$4.3~~$2.1 million, net of tax, was recorded in accumulated other comprehensive loss to recognize the effective portion of the fair value of the Swaps that qualify as cash flow hedges.

Trade Receivables

In the ordinary course of business, the Company grants trade credit to its customers on normal credit terms. In an effort to reduce its credit risk, the Company (i) establishes credit limits for all customers, (ii) performs ongoing credit evaluations of customers’ financial condition, (iii) monitors the payment history and aging of customers’ receivables, and (iv) monitors open orders against an individual customer’s outstanding receivable balance.

The Company's allowance for credit losses is maintained for trade accounts receivable based on the expected collectability, the historical collection experience, the length of time an account is outstanding, the financial position of the customer and information provided by credit rating services. Effective March 29, 2020, the Company adopted Update No. 2016-13, Financial Instruments – Credit Losses (Topic 326) which requires consideration of events or circumstances indicating historic collection rates may not be indicative of future collectability. For example, potential adverse changes to customer liquidity from new macroeconomic events such as the COVID-19 pandemic must be taken into consideration. To date, the Company has not experienced significant customer payment defaults, or identified other significant collectability concerns as a result of the pandemic.

The following is a rollfoward of the allowance for credit losses:


	Three Months Ended
(In thousands)	June 27, 2020		June 29, 2019
Beginning balance	$	3,824	$	3,937
Credit loss expense	(259)		(299)
Write-offs	(119)		(14)
Ending balance	$	3,446	$	3,624

Fair Value of Derivative Instruments

The following table presents the effect of the Company's derivative instruments designated as cash flow hedges and those not designated as hedging instruments under ASC 815 in its condensed consolidated statements of ~~loss~~income (loss) and comprehensive ~~loss~~income (loss) for the three months ended June ~~29, 2019:~~27, 2020:


(In thousands)	Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Loss		Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings		Location in Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)	Amount of Gain (Loss) Excluded from Effectiveness Testing		Location in Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
Designated foreign currency hedge contracts, net of tax	$	1,883	$	(129)	Net revenues, COGS and SG&A	$	(248)	Interest and other expense, net
Non-designated foreign currency hedge contracts	$	—	$	—		$	(1,842)	Interest and other expense, net
Designated interest rate swaps, net of tax	$	(3,131)	$	(1,013)	Interest and other expense, net	$	—

(In thousands) Amount of Gain
(Loss) Recognized
in Accumulated Other Comprehensive Loss Amount of Gain (Loss) Reclassified
from Accumulated Other Comprehensive Loss into
Earnings Location in
Consolidated Statements of Loss and Comprehensive Loss
Amount of Gain Excluded from
Effectiveness
Testing
Location in
Consolidated Statements of Loss and Comprehensive Loss
Designated foreign currency hedge contracts, net of tax $ 672
$ 336
Net revenues, COGS and SG&A $ 199
Interest and other expense, net
Non-designated foreign currency hedge contracts —
—
$ (256 ) Interest and other expense, net
Designated interest rate swaps, net of tax $ (4,292 ) $ (143 ) Interest and other expense, net $ —

The Company did not have fair value hedges or net investment hedges outstanding as of June ~~29, 2019~~27, 2020 or March ~~30, 2019.~~28, 2020. As of June ~~29, 2019, no~~27, 2020, 0 material deferred tax assets were recognized for designated foreign currency hedges.

ASC 815 requires all derivative instruments to be recognized at their fair values as either assets or liabilities on the balance sheet. The Company determines the fair value of its derivative instruments using the framework prescribed by ASC 820, Fair Value Measurements and Disclosures, by considering the estimated amount it would receive or pay to sell or transfer these instruments at the reporting date and by taking into account current interest rates, currency exchange rates, current interest rate curves, interest rate volatilities, the creditworthiness of the counterparty for assets, and its creditworthiness for liabilities. In certain instances, the Company may utilize financial models to measure fair value. Generally, it uses inputs that include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; other observable inputs for the asset or liability; and inputs derived principally from, or corroborated by, observable market data by correlation or other means. As of June ~~29, 2019,~~27, 2020, the Company has classified its derivative assets and

liabilities within Level 2 of the fair value hierarchy prescribed by ASC 815, as discussed below, because these observable inputs are available for substantially the full term of its derivative instruments.

The following tables present the fair value of the Company's derivative instruments as they appear in its condensed consolidated balance sheets as of June ~~29, 2019~~27, 2020 and March ~~30, 2019:~~28, 2020:


(In thousands)	Location in Condensed Consolidated Balance Sheets	As of		As of
				June 27, 2020		March 28, 2020
Derivative Assets:
Designated foreign currency hedge contracts	Other current assets	$	227	$	839
Non-designated foreign currency hedge contracts	Other current assets	164		$	377

		$	391	$	1,216
Derivative Liabilities:
Designated foreign currency hedge contracts	Other current liabilities	$	1,073	$	1,854
Non-designated foreign currency hedge contracts	Other current liabilities	68		1,435
Designated interest rate swaps	Other current liabilities	5,875		5,581
Designated interest rate swaps	Other long-term liabilities	9,243		9,475
		$	16,259	$	18,345

(In thousands) Location in
Balance Sheet As of As of
June 29, 2019 March 30, 2019
Derivative Assets:
Designated foreign currency hedge contracts Other current assets $ 550
$ 1,208
Non-designated foreign currency hedge contracts Other current assets 41
69
$ 591
$ 1,277
Derivative Liabilities:
Designated foreign currency hedge contracts Other current liabilities $ 585
$ 145
Non-designated foreign currency hedge contracts Other current liabilities 436
—
Designated interest rate swaps Other current liabilities 9,071
5,203
$ 10,092
$ 5,348

Other Fair Value Measurements

Fair value is defined as the exit price that would be received from the sale of an asset or paid to transfer a liability, using assumptions that market participants would use in pricing an asset or liability. The fair value guidance establishes the following three-level hierarchy used for measuring fair value:

•Level 1 — Inputs to the valuation methodology are quoted market prices for identical assets or liabilities.

•Level 2 — Inputs to the valuation methodology are other observable inputs, including quoted market prices for similar assets or liabilities and market-corroborated inputs.

•Level 3 — Inputs to the valuation methodology are unobservable inputs based on management’s best estimate of inputs market participants would use in pricing the asset or liability at the measurement date, including assumptions about risk.

The Company's money market funds carried at fair value are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices.

Fair Value Measured on a Recurring Basis

Financial assets and financial liabilities measured at fair value on a recurring basis consist of the following as of June ~~29, 2019~~27, 2020 and March ~~30, 2019.~~28, 2020.


	As of June 27, 2020
(In thousands)	Level 1		Level 2		Level 3		Total
Assets
Money market funds	$	171,313	$	—	$	—	$	171,313
Designated foreign currency hedge contracts	—		227		—		227
Non-designated foreign currency hedge contracts	—		164		—		164

	$	171,313	$	391	$	—	$	171,704
Liabilities
Designated foreign currency hedge contracts	$	—	$	1,073	$	—	$	1,073
Non-designated foreign currency hedge contracts	—		68		—		68
Designated interest rate swaps	—		15,118		—		15,118
Contingent consideration	—		—		3,920		3,920
	$	—	$	16,259	$	3,920	$	20,179

	As of March 28, 2020
	Level 1		Level 2		Level 3		Total
Assets
Money market funds	$	44,564	$	—	$	—	$	44,564
Designated foreign currency hedge contracts	—		839		—		839
Non-designated foreign currency hedge contracts	—		377		—		377

	$	44,564	$	1,216	$	—	$	45,780
Liabilities
Designated foreign currency hedge contracts	$	—	$	1,854	$	—	$	1,854
Non-designated foreign currency hedge contracts	—		1,435		—		1,435
Designated interest rate swaps	—		15,056		—		15,056
	$	—	$	18,345	$	—	$	18,345

As of June 29, 2019
(In thousands) Level 1 Level 2 Total
Assets
Money market funds $ 35,506
$ —
$ 35,506
Designated foreign currency hedge contracts —
550
550
Non-designated foreign currency hedge contracts —
41
41
$ 35,506
$ 591
$ 36,097
Liabilities
Designated foreign currency hedge contracts $ —
$ 585
$ 585
Non-designated foreign currency hedge contracts —
436
436
Designated interest rate swaps —
9,071
9,071
$ —
$ 10,092
$ 10,092

As of March 30, 2019
Level 1 Level 2 Total
Assets
Money market funds $ 36,980
$ —
$ 36,980
Designated foreign currency hedge contracts —
1,208
1,208
Non-designated foreign currency hedge contracts —
69
69
$ 36,980
$ 1,277
$ 38,257
Liabilities

Designated foreign currency hedge contracts $ —
$ 145
$ 145
Designated interest rate swaps $ —
$ 5,203
$ 5,203
$ —
$ 5,348
$ 5,348

Foreign currency hedge contracts - The fair value of foreign currency hedge contracts was measured using significant other observable inputs and valued by reference to over-the-counter quoted market prices for similar instruments. The Company does not believe that the fair value of these derivative instruments differs significantly from the amount that could be realized upon settlement or maturity, or that the changes in fair value will have a significant effect on its results of operations, financial condition or cash flows.

Interest rate swaps - The fair value of interest rate swaps are measured using the present value of expected future cash flows using market-based observable inputs, including credit risk and interest rate yield curves. The Company does not believe that the fair values of these derivative instruments differ significantly from the amounts that could be realized upon settlement or maturity, or that the changes in fair value will have a significant effect on its results of operations, financial condition or cash flows.

Contingent consideration - The fair value of contingent consideration liabilities is based on significant unobservable inputs, including management estimates and assumptions, and are measured based on the probability-weighted present value of the payments expected to be made. Accordingly, the fair value of contingent consideration has been classified as level 3 within the fair value hierarchy. The recurring level 3 fair value measurements of contingent consideration liabilities include the following significant unobservable inputs:

Fair Value at

Valuation

Unobservable

(In thousands)

June 27, 2020

Technique

Input

Range

Revenue-based payments

1,900

Discounted cash flow

Discount rate

8.5%

Projected year of payment

2021 - 2023

Regulatory-based payments

2,000

Discounted cash flow

Discount rate

4.9%

Probability of payment

0% - 100%

Projected year of payment

2021 - 2023

As of June 27, 2020, the maximum potential contingent consideration that the Company could be required to pay is $4.5 million. The fair value of contingent consideration associated with acquisitions was $3.9 million at June 27, 2020. As of June 27, 2020, $0.5 million was included in other current liabilities and $3.4 million was included in other liabilities on the condensed consolidated balance sheet.

Reconciliation of the change in the fair value of contingent consideration are included in the following table:


(In thousands)
Balance at March 28, 2020	$	—
Acquisition date fair value of contingent consideration	3,920
Balance at June 27, 2020	$	3,920

Other Fair Value Disclosures

The Term Loan, which is carried at amortized cost, accounts receivable and accounts payable approximate fair value.

~~14.~~13. COMMITMENTS AND CONTINGENCIES

The Company is a party to various legal proceedings and claims arising out of the ordinary course of its business. The Company believes ~~that except for those matters described below,~~ there are no ~~other~~ proceedings or claims pending against it the ultimate resolution of which could have a material adverse effect on the financial condition or results of operations. At each reporting period, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under ASC 450, Contingencies, for all matters. Legal costs are expensed as incurred.

~~Litigation and Related Matters~~

~~Product Recall~~

In August 2018, the Company issued a voluntary recall of certain whole blood collection kits sold to its Blood Center customers in the U.S. The recall resulted from some collection sets' filters failing to adequately remove leukocytes from collected blood. As a result of the recall, the Company's Blood Center customers may have conducted tests to confirm that the collected blood was adequately leukoreduced, sold the collected blood labeled as non-leukoreduced at a lower price or discarded the collected blood. As of June 29, 2019, the Company has recorded cumulative charges of $1.9 million associated with this recall which consists of $0.1 million of charges associated with customer returns and inventory reserves and $1.8 million of charges associated with customer claims. Substantially all outstanding claims have been paid as of June 29, 2019.

~~15.~~14. SEGMENT AND ENTERPRISE-WIDE INFORMATION

The Company determines its reportable segments by first identifying its operating segments, and then by assessing whether any components of these segments constitute a business for which discrete financial information is available and where segment management regularly reviews the operating results of that component. Historically, the Company's operating segments were based primarily on geography. Effective as of March 31, 2019, the Company completed the transition of its operating ~~structuring~~structure to three global business units and accordingly, ~~has~~ reorganized its reporting structure to align with its ~~three~~3 global business units and the information that will be regularly reviewed by the Company's chief operating decision maker.

Following the reorganization, the Company's reportable segments are as follows:

•Plasma

•Blood Center

•Hospital

Management measures and evaluates the operating segments based on operating income. Management excludes certain corporate expenses from segment operating income. In addition, certain amounts that management considers to be non-recurring or non-operational are excluded from segment operating income because management evaluates the operating results of the segments excluding such items. These items include restructuring and turnaround costs, deal amortization, asset impairments, accelerated depreciation ~~certain~~and related costs, costs related to compliance with the European Union Medical Device Regulation, transaction costs and certain legal charges. Although these amounts are excluded from segment operating income, as applicable, they are included in the reconciliations that follow. Management measures and evaluates the Company's net revenues and operating income using internally derived standard currency exchange rates that remain constant from year to year; therefore, segment information is presented on this basis.

Selected information by reportable segment is presented below:


	Three Months Ended
(In thousands)	June 27, 2020		June 29, 2019
Net revenues
Plasma	$	68,715	$	110,763
Blood Center	79,314		77,996
Hospital	45,571		47,187
Net revenues by business unit	193,600		235,946
Service ⁽¹⁾	5,082		4,866
Effect of exchange rates	(3,105)		(2,361)
Net revenues	$	195,577	$	238,451
⁽¹⁾ Reflects revenue for service, maintenance and parts


	Three Months Ended						Three Months Ended
(In thousands)	June 29, 2019			June 30, 2018		(In thousands)	June 27, 2020		June 29, 2019
Net revenues
Segment operating income						Segment operating income
Plasma	$	110,763		$	99,290	Plasma	$	36,350	$	53,725
Blood Center	77,996			79,818		Blood Center	38,745		37,719
Hospital	47,187			45,845		Hospital	17,783		18,916
Net revenues by business unit	235,946			224,953
Service ⁽¹⁾	4,866			4,325
Segment operating income						Segment operating income	92,878		110,360
Corporate expenses ⁽¹⁾						Corporate expenses ⁽¹⁾	(65,062)		(61,703)
Effect of exchange rates	(2,361		)	69		Effect of exchange rates	711		2,769
Net revenues	$	238,451		$	229,347
⁽¹⁾ Reflects revenue for service, maintenance and parts
Impairment of assets and other related charges						Impairment of assets and other related charges	(964)		(51,166)
Deal amortization						Deal amortization	(8,263)		(5,974)
PCS2 accelerated depreciation and related costs						PCS2 accelerated depreciation and related costs	(1,542)		(5,528)

Restructuring and turnaround costs						Restructuring and turnaround costs	(4,000)		(2,027)
European Medical Device Regulation costs and other						European Medical Device Regulation costs and other	(753)		(33)
Transaction costs						Transaction costs	(1,290)		—
Operating income (loss)						Operating income (loss)	$	11,715	$	(13,302)
⁽¹⁾ Reflects shared service expenses including quality and regulatory, customer and field service, research and development, manufacturing and supply chain, as well as other corporate support functions.						⁽¹⁾ Reflects shared service expenses including quality and regulatory, customer and field service, research and development, manufacturing and supply chain, as well as other corporate support functions.

Three Months Ended
(In thousands) June 29,
2019 June 30,
2018
Segment operating income
Plasma $ 53,725
$ 41,921
Blood Center 37,719
38,472
Hospital 18,916
18,328
Segment operating income 110,360
98,721
Corporate expenses ⁽¹⁾
(61,703 ) (61,050 )
Effect of exchange rates 2,769
3,055
Impairment of assets and other related charges (51,166 ) (21,170 )
Deal amortization (5,974 ) (6,300 )
PCS2 accelerated depreciation and related costs (5,528 ) (3,939 )
Restructuring and turnaround costs (2,027 ) (3,349 )
Other (33 ) (675 )
Operating (loss) income $ (13,302 ) $ 5,293
⁽¹⁾ Reflects shared service expenses including quality and regulatory, customer and field service, research and development, manufacturing and supply chain, as well as other corporate support functions.

(In thousands) June 29,
2019 March 30,
2019
Long-lived assets⁽¹⁾

Plasma $ 168,816
$ 209,827
Blood Center 88,560
110,073
Hospital 19,372
24,079
Total long-lived assets $ 276,748
$ 343,979
⁽¹⁾ Long-lived assets are comprised of property, plant and equipment.

Management reviews revenue based on the reportable segments noted above. Although these reportable segments are primarily product-based, they differ from the Company’s product line revenues for Plasma products and services and Blood Center products and services. Specifically, the Blood Center reportable segment includes plasma products utilized for collection in blood centers primarily for transfusion purposes. Additionally, product line revenues also include service revenues which are excluded from the reportable segments.

Net revenues by product line are as follows:


	Three Months Ended
(In thousands)	June 27, 2020		June 29, 2019
Plasma products and services	$	88,713	$	129,745
Blood Center products and services	60,667		59,907
Hospital products and services	46,197		48,799
Net revenues	$	195,577	$	238,451

Three Months Ended
(In thousands) June 29,
2019 June 30,
2018
Plasma products and services $ 129,745
$ 116,903
Blood Center products and services 59,907
64,483
Hospital products and services 48,799
47,961
Net revenues $ 238,451
$ 229,347

Net revenues generated in the Company's principle operating regions on a reported basis are as follows:


	Three Months Ended					Three Months Ended
(In thousands)	June 29, 2019		June 30, 2018		(In thousands)	June 27, 2020		June 29, 2019
United States	$	156,375	$	142,140	United States	$	111,009	$	156,375
Japan	15,467		17,389		Japan	16,831		15,467
Europe	36,753		39,002		Europe	43,019		36,753
Asia	28,641		29,395		Asia	22,384		28,641
Other	1,215		1,421		Other	2,334		1,215
Net revenues	$	238,451	$	229,347	Net revenues	$	195,577	$	238,451

~~16.~~15. ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of Accumulated Other Comprehensive Loss are as follows:


(In thousands)	Foreign Currency		Defined Benefit Plans		Net Unrealized Gain/Loss on Derivatives		Total
Balance as of March 28, 2020	$	(31,100)	$	(209)	$	(13,826)	$	(45,135)
Other comprehensive income (loss) before reclassifications⁽¹⁾	1,534		—		(1,247)		287
Amounts reclassified from Accumulated Other Comprehensive Loss⁽¹⁾	—		—		1,142		1,142
Net current period other comprehensive income (loss)	1,534		—		(105)		1,429
Balance as of June 27, 2020	$	(29,566)	$	(209)	$	(13,931)	$	(43,706)

(In thousands) Foreign Currency Defined Benefit Plans Net Unrealized Gain/Loss on Derivatives Total
Balance as of March 30, 2019 $ (25,513 ) $ (527 ) $ (4,340 ) $ (30,380 )
Other comprehensive loss before reclassifications⁽¹⁾
195
—
(3,620 ) (3,425 )
Amounts reclassified from Accumulated Other Comprehensive Loss⁽¹⁾
—
—
(193 ) (193 )
Net current period other comprehensive income (loss) 195
—
(3,813 ) (3,618 )
Balance as of June 29, 2019 $ (25,318 ) $ (527 ) $ (8,153 ) $ (33,998 )

⁽¹⁾ Presented net of income taxes, the amounts of which are insignificant.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with both our interim condensed consolidated financial statements and notes thereto which appear elsewhere in this Quarterly Report on Form 10-Q and our annual consolidated financial statements, notes thereto and the MD&A contained in our Annual Report on Form 10-K for the fiscal year ended March ~~30, 2019.~~28, 2020. The following discussion may contain forward-looking statements and should be read in conjunction with the “Cautionary Statement Regarding Forward-Looking Information” in this discussion.

Introduction

Haemonetics is a global healthcare company dedicated to providing a suite of innovative hematology products and solutions to customers to help improve patient care and reduce the cost of healthcare. Our technology addresses important medical markets including blood and plasma component collection, the surgical suite, and hospital transfusion services. When used in this report, the terms “we,” “us,” “our” and ~~the "Company”~~“the Company” mean Haemonetics.

~~Our products are organized into~~

We view our operations and manage our business in three ~~categories for purposes of evaluating and developing their growth potential:~~principal reporting segments: Plasma, Blood Center and Hospital. For that purpose, “Plasma” includes plasma collection devices and disposables, plasma donor management software, and anticoagulant and saline sold to ~~commercial~~ plasma ~~customers that collect plasma primarily for further fractionation into plasma-derived biopharmaceuticals.~~customers. “Blood Center” includes blood collection and processing devices and disposables for ~~apheresis (red~~red cells, platelets and ~~plasma) and~~ whole blood ~~that are used primarily for transfusion purposes~~ as well as related donor management software. "Hospital", which is comprised of Hemostasis Management, Cell Salvage and Transfusion Management products, includes devices and methodologies for measuring coagulation characteristics of blood, surgical blood salvage systems, specialized blood cell processing systems and disposables and blood transfusion management software.

We believe that Plasma and Hospital have growth potential, while Blood Center competes in challenging markets which require us to manage the business differently, including reducing costs, ~~rationalizing~~shrinking the scope of the current product line, and evaluating opportunities to exit unfavorable customer contracts.

Recent Developments

~~Divestiture~~COVID-19 Update

~~On May 21, 2019, we transferred~~We continue to ~~CSL Plasma Inc. (“CSL”) substantially all~~closely manage the impacts of the ~~tangible assets held by Haemonetics relating to~~COVID-19 pandemic on our business results of operations and financial condition. The progression of the manufacture of anti-coagulant and saline at our Union, South Carolina facility and CSL assumed certain related liabilities pursuant to the terms of a settlement, release and asset transfer agreement between the parties dated May 13, 2019. At the closing, we received $9.8 million of proceeds and were concurrently released from our obligations to supply liquid solutions under a 2014 supply agreement with CSL. We will continue to supply liquid solutions to our customers following the asset transfer agreement pursuant to our supplier arrangements with contract manufacturers. We recognized an asset impairment inCOVID-19 pandemic during the first quarter of fiscal 2021 significantly impacted our financial results. While the duration and additional implications remain uncertain, the full extent of the impact will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning COVID-19, the actions taken to contain it or treat its impact and the economic impact on local, regional, national and international markets.

Our priorities continue to be business continuity, the safety of our employees and cash preservation while continuing to invest in organic growth opportunities. Our manufacturing and supply chain remain operational without any shutdowns or significant disruptions and we continue to operate in all of our markets.

Although the pace and timing of the recovery is uncertain, we remain confident in the long term strength of the end markets that we serve across our three business units. For additional information regarding the expected impacts to our business units and the various risks posed by the COVID-19 pandemic, refer to Results of Operations within Management's Discussion and Analysis and Risk Factors contained in this Quarterly Report on Form 10-Q.

Acquisition

On April 1, 2020, we acquired enicor GmbH ("enicor"), the manufacturer of ~~$48.7~~ClotPro^®, a new generation whole blood coagulation testing system that is currently available in select European and Asia Pacific markets, for total consideration of $20.5 million, aswhich consisted of upfront payments of $16.6 million and the fair value of contingent consideration of $3.9 million. The contingent consideration, which could total a ~~result~~maximum of $4.5 million, consists of payments related to the achievement of certain revenue and regulatory milestones. The acquisition of this ~~transaction.~~viscoelastic diagnostic device augments the Company's portfolio of hemostasis analyzers within the Hospital business unit. Refer to Note 4, Acquisition, to the Unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for additional information.

~~Share Repurchase Program~~Divestitures

~~In May 2019,~~Fajardo, Puerto Rico Manufacturing Operations

On June 29, 2020, we sold our ~~Board~~Fajardo, Puerto Rico, manufacturing operations to GVS, S.p.A ("GVS"), a leading provider of ~~Directors authorized the repurchase~~advanced filtration solutions for critical applications for $15.5 million ($8.1 million, net of up to $500 million of Haemonetics common shares over the next two years. In early June 2019, we entered into an accelerated share repurchase agreement ("ASR") with Citibank N.A. ("Citibank") to repurchase approximately $75.0 million of the Company’s common stock. Pursuant tocash transferred). Under the terms of the ~~ASR, in June 2019, we paid Citibank $75.0 million in~~agreement, Haemonetics retained all intellectual property rights to its proprietary blood filters currently manufactured at its Fajardo facility and GVS acquired certain assets consisting primarily of property, plant and equipment, inventory and cash and has assumed certain related liabilities. In addition, the two parties entered into a long-term supply and development agreement that, among other things, grants GVS exclusive rights to manufacture and supply the blood filters currently produced at the Fajardo facility for Haemonetics. This divestiture will allow Haemonetics to utilize GVS' experience and scale in filtration to deliver reliable, cost-efficient products to its customers. Refer to Note 5, Divestitures, to the Unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for additional information.

U.S. Blood Donor Management Software

On July 1, 2020, we sold certain U.S. blood donor management software solution assets within our Blood Center business unit to the GPI Group for an upfront cash payment of $14.0 million ($13.6 million, net of working capital adjustments). In addition to the cash received upon closing, we may also receive up to an ~~initial delivery~~additional $14.0 million, contingent upon the achievement of ~~approximately 0.6 million shares~~certain performance measures. This divestiture better positions Haemonetics for sustainable growth by enabling the Company to focus on its core capabilities while delivering quality products and services where it brings distinct value. Refer to Note 5, Divestitures, to the Unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for additional information

Inlog Holdings France

On July 23, 2020, we entered into a definitive agreement to sell our wholly-owned subsidiary Inlog Holdings France SAS to Abénex Capital ("Abénex"), a private equity firm based in France. Inlog Holdings France SAS, through its subsidiary In Log SAS, develops and sells blood bank and hospital software solutions used predominantly in France and in several other countries outside of the U.S. This divestiture and the sale of our ~~common stock based~~U.S. blood donor management software better position us to focus on aour growth segments. This transaction is expected to close in the second quarter of fiscal 2021, subject to Abénex's receipt of financing and the satisfaction of other customary closing market price of the Company's common stock on the New York Stock Exchange on June 3, 2019 of $97.45. This initial delivery of shares represented approximately 80% of the notional amount of the ASR. On July 30, 2019, the ASR was completed and an additional 29,018 shares were delivered upon settlement. The total number of shares repurchased under the ASR was approximately 0.6 million at an average price per share upon final settlement of $116.33.conditions.

~~As of August 6, 2019, the total remaining authorization for repurchases of the Company's common stock under our share repurchase program was $425 million.~~

Restructuring Program

In July 2019, our Board of Directors approved a new Operational Excellence Program (the "2020 Program") and delegated authority to management to determine the detail of the initiatives that will comprise the program. The 2020 Program is designed to improve operational performance and reduce cost principally in our manufacturing and supply chain operations. We estimate that we will incur aggregate charges between $60 million and $70 million in connection with the 2020 Program. These charges, the majority of which will result in cash outlays, including severance and other employee costs, will be incurred as the specific actions required to execute these initiatives are identified and approved and are expected to be substantially completed by the end of fiscal 2023. Savings from the 2020 Program are targeted to reach $80 million to $90 million on an annualized basis once the program is completed.

~~Relocation of Corporate Headquarters~~

~~In December 2018, we entered into a lease for office space in Boston, MA that will serve as our new corporate headquarters and replace our existing location in Braintree, MA.~~ During the first quarter of fiscal 2020, we entered into a purchase and sale agreement that provides for the sale of our existing corporate headquarters and is subject to the satisfaction of customary closing conditions. Accordingly, we reclassified $7.6 million of long term assets associated with the current corporate headquarters to assets held-for-sale as of June 29, 2019. We believe our move to Boston, which is anticipated to occur in the third quarter of fiscal 2020, will attract and retain key talent and provide a dynamic space to engage our employees.

~~Change in Reportable Segments~~

Effective as of March 31, 2019, we completed the transition of the Company's operating structure to three global business units - Plasma, Blood Center and Hospital - and accordingly reorganized our operating and reporting structure to align with our three global business units. This new segment structure has been realigned in accordance with the respective markets to accurately reflect the ongoing performance of each business and excludes service. The discussion of our results of operations that follows has been revised to reflect our new reportable segments.

~~Financial Summary~~

Three Months Ended
(In thousands, except per share data) June 29,
2019 June 30,
2018 % Increase/
(Decrease)
Net revenues $ 238,451
$ 229,347
4.0 %
Gross profit $ 115,906
$ 83,244
39.2 %
% of net revenues 48.6 % 36.3 %
Operating expenses $ 129,208
$ 77,951
65.8 %
Operating (loss) income $ (13,302 ) $ 5,293
n/m
% of net revenues (5.6 )% 2.3 %
Interest and other expense, net $ (4,423 ) $ (1,978 ) n/m
(Loss) income before (benefit) provision for income taxes $ (17,725 ) $ 3,315
n/m
(Benefit) provision for income taxes $ (9,246 ) $ 6,134
n/m
% of pre-tax income 52.2 % 185.0 %
Net loss $ (8,479 ) $ (2,819 ) n/m
% of net revenues (3.6 )% (1.2 )%
Net loss per share - basic and diluted $ (0.17 ) $ (0.05 ) n/m

~~Net revenues increased 4.0% for~~ the three months ended June ~~29, 2019,~~27, 2020, we incurred $3.5 million of restructuring and turnaround costs under this program.

Financial Summary


	Three Months Ended
(In thousands, except per share data)	June 27, 2020			June 29, 2019			% Increase/ (Decrease)
Net revenues	$	195,577		$	238,451		(18.0)	%
Gross profit	$	90,030		$	115,906		(22.3)	%
% of net revenues	46.0		%	48.6		%
Operating expenses	$	78,315		$	129,208		(39.4)	%
Operating income (loss)	$	11,715		$	(13,302)		n/m
% of net revenues	6.0		%	(5.6)		%
Interest and other expense, net	$	(3,735)		$	(4,423)		(15.6)	%
Income (loss) before provision for income taxes	$	7,980		$	(17,725)		n/m
Benefit for income taxes	$	(2,547)		$	(9,246)		(72.5)	%
% of pre-tax income	(31.9)		%	52.2		%
Net income (loss)	$	10,527		$	(8,479)		n/m
% of net revenues	5.4		%	(3.6)		%
Net income (loss) per share - basic	$	0.21		$	(0.17)		n/m
Net income (loss) per share - diluted	$	0.21		$	(0.17)		n/m

Net revenues decreased 18.0% during the three months ended June 27, 2020, as compared with the same period of fiscal ~~2019.~~2020. Without the effect of foreign exchange, net revenues ~~increased 5.0% for~~decreased 17.5% during the three months ended June ~~29, 2019,~~27, 2020, as compared with the same period of fiscal ~~2019.~~2020. Revenue ~~increases~~decreases in Plasma and Hospital ~~were partially offset by declines~~due to the COVID-19 pandemic primarily drove the overall decrease in ~~Blood Center~~revenue during the three months ended June ~~29, 2019.~~27, 2020.

Operating income ~~decreased~~increased for the three months ended June ~~29, 2019,~~27, 2020, as compared with the same period of fiscal ~~2019,~~2020, primarily due to impairment charges ~~recognized in the first quarter of fiscal 2020 as a result of~~associated with the divestiture of our plasma

liquid solutions operations to ~~CSL. This decrease~~CSL in the prior year and incremental savings from the 2020 Program. The increase was partially offset by ~~favorable pricing~~the impact of the COVID-19 pandemic on revenue and ~~volume and incremental complexity reduction~~gross margin, net of savings in ~~the current year period.~~operating expenses from cost containment actions taken to offset these negative effects.

Management's Use of Non-GAAP Measures

Management uses non-GAAP financial measures, in addition to financial measures in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"), to monitor the financial performance of the business, make informed business decisions, establish budgets and forecast future results. These non-GAAP financial measures should be considered supplemental to, and not a substitute for, our reported financial results prepared in accordance with U.S. GAAP. Constant currency growth, a non-GAAP financial measure, measures the change in revenue between the current and prior year periods using a constant currency conversion rate. We have provided this non-GAAP financial measure because we believe it provides meaningful information regarding our results on a consistent and comparable basis for the periods presented.

RESULTS OF OPERATIONS

Net Revenues by Geography


	Three Months Ended
(In thousands)	June 27, 2020		June 29, 2019		Reported growth		Currency impact		Constant currency growth⁽¹⁾
United States	$	111,009	$	156,375	(29.0)	%	—	%	(29.0)	%
International	84,568		82,076		3.0	%	(0.8)	%	3.8	%
Net revenues	$	195,577	$	238,451	(18.0)	%	(0.5)	%	(17.5)	%

Three Months Ended
(In thousands) June 29,
2019 June 30,
2018 Reported growth Currency impact
Constant currency growth⁽¹⁾
United States $ 156,375
$ 142,140
10.0 % — % 10.0 %
International 82,076
87,207
(5.9 )% (2.8 )% (3.1 )%
Net revenues $ 238,451
$ 229,347
4.0 % (1.0 )% 5.0 %

⁽¹⁾Constant currency growth, a non-GAAP financial measure, measures the change in revenue between the current and prior year periods using a constant currency. See "Management's Use of Non-GAAP Measures."

Our principal operations are in the ~~U.S.,~~U.S, Europe, Japan and other parts of Asia. Our products are marketed in approximately 9085 countries around the world through a combination of our direct sales force, independent distributors and agents. Our revenue generated outside the U.S. was ~~34.4%~~43.2% of total net revenues ~~for~~during the three months ended June 27, 2020, as compared with 34.4% during the three months ended June 29, ~~2019, as compared with 38.0% for the three months ended June 30, 2018.~~2019. International sales are generally conducted in local currencies, primarily Japanese Yen, Euro, Chinese Yuan and Australian Dollars. Our results of operations are impacted by changes in foreign exchange rates, particularly in the value of the Yen, Euro and Australian Dollar relative to the U.S. Dollar. We have placed foreign currency hedges to mitigate our exposure to foreign currency fluctuations.

Please see the section entitled “Foreign Exchange” in this discussion for a more complete explanation of how foreign currency affects our business and our strategy for managing this exposure.

Net Revenues by Business Unit


	Three Months Ended											Three Months Ended
(In thousands)	June 29, 2019		June 30, 2018		Reported growth		Currency impact		Constant currency growth ⁽¹⁾		(In thousands)	June 27, 2020		June 29, 2019		Reported growth		Currency impact		Constant currency growth ⁽¹⁾
Plasma	$	110,422	$	99,354	11.1	%	(0.5	)%	11.6	%	Plasma	$	68,211	$	110,422	(38.2)	%	(0.2)	%	(38.0)	%
Blood Center	75,803		78,823		(3.8	)%	(1.5	)%	(2.3	)%	Blood Center	77,789		75,803		2.6	%	0.9	%	1.7	%
Hospital ⁽²⁾	47,697		46,980		1.5	%	(1.4	)%	2.9	%	Hospital ⁽²⁾	44,839		47,697		(6.0)	%	(2.6)	%	(3.4)	%
Service	4,529		4,190		8.1	%	(4.4	)%	12.5	%	Service	4,738		4,529		4.6	%	0.1	%	4.5	%
Net revenues	$	238,451	$	229,347	4.0	%	(1.0	)%	5.0	%	Net revenues	$	195,577	$	238,451	(18.0)	%	(0.5)	%	(17.5)	%

⁽²⁾ Hospital revenue includes Hemostasis Management revenue of $24.0 million and $24.4 million ~~and $21.3 million for~~during the three months ended June ~~29, 2019~~27, 2020 and June ~~30, 2018,~~29, 2019, respectively. Hemostasis Management revenue ~~increased 14.1%~~decreased 1.6% in the first quarter of fiscal ~~2020~~2021, as compared with the same period of fiscal ~~2019.~~2020. Without the effect of foreign exchange, Hemostasis Management revenue increased ~~15.7%~~3.2% in the first quarter of fiscal 2021, as compared with the same period of fiscal 2020.

Plasma

Plasma revenue decreased 38.2% during the three months ended June 27, 2020, as compared with the same period of fiscal ~~2019.~~

~~Plasma~~

2020. Without the effect of foreign exchange, Plasma revenue ~~increased 11.1% during~~decreased 38.0% for the three months ended June ~~29, 2019,~~27, 2020, as compared with the same period of fiscal ~~2019. Without~~2020. This revenue decrease was driven by a decline in the ~~effect~~volume of ~~foreign exchange,~~plasma disposables, primarily in the U.S., due to the COVID-19 pandemic. Declines in plasma liquid solutions as a result of certain strategic exits within our plasma liquid solutions business and declines in software revenue due to a one time favorable impact in the prior year period also contributed to the decrease.

We anticipate a continued negative impact from COVID-19 on our fiscal 2021 Plasma results as factors like stay at home orders, limited public transportation and border travel, college campus closures and reticence to donate will continue to impact our revenue throughout the COVID-19 pandemic and recovery. While we expect a return to historic collection volume growth rates in the future, we anticipate that the recovery of plasma collection volumes will be protracted due to the uncertainty of COVID-19. We remain confident in the strength of the plasma end market as the long-term global demand for plasma-derived pharmaceuticals is expected to continue.

Blood Center

Blood Center revenue increased ~~11.6% for~~2.6% during the three months ended June ~~29, 2019,~~27, 2020, as compared with the same period of fiscal 2019. This revenue growth was primarily driven by an increase in volume of plasma disposables due to continued strong performance in the U.S. and favorable NexSys PCS pricing during the three months ended June 29, 2019. Increases in sales of software also contributed to the growth during the three months ended June 29, 2019.

On May 21, 2019, we transferred to CSL substantially all of the tangible assets held by Haemonetics relating to the manufacture of anti-coagulant and saline at our Union, South Carolina facility. We will continue to supply liquid solutions to our customers following the asset transfer agreement pursuant to our supplier arrangements with contract manufacturers.

~~Blood Center~~

~~Blood Center revenue decreased 3.8% during the three months ended June 29, 2019, as compared with the same period of fiscal 2019.~~2020. Without the effect of foreign exchange, Blood Center revenue ~~decreased 2.3%~~increased 1.7% for the three months ended June ~~29, 2019,~~27, 2020, as compared with the same period of fiscal 2019. This decrease was primarily driven by declines in apheresis due to decreases in platelet revenue as a result of the continued shift toward double dose collection techniques in Japan. Declines in whole blood revenue in the same market also contributed to the overall decrease.

~~Hospital~~

~~Hospital revenue increased 1.5%~~2020. The increase during the three months ended June ~~29, 2019,~~27, 2020 was primarily driven by an increase in apheresis revenue in international indirect markets due to order timing, partially offset by declines in apheresis revenue as certain customers converted to alternative sources of supply. The expected impact of the loss of this apheresis business is an incremental revenue decline of approximately $17 million in fiscal 2021 as compared with fiscal 2020. Declines in whole blood disposables and software revenue in the U.S. also partially offset the overall increase in Blood Center revenue.

During the three months ended June 27, 2020, the impact of COVID-19 on the Blood Center business unit was limited as distributors and blood collectors made large stocking orders in response to the COVID-19 pandemic, particularly in Europe and the Middle East. Despite the strong first quarter performance, we expect that the benefit of the high stocking orders may reverse as customers' risk aversion returns to normal along with safety stock levels. While hospital procedures have resumed, we anticipate that it will take time for procedure volumes to fully revert back to pre-COVID-19 levels, which may temporarily reduce the demand for blood products in fiscal 2021.

Hospital

Hospital revenue decreased 6.0% during the three months ended June 27, 2020, as compared with the same period of fiscal ~~2019.~~2020. Without the effect of foreign exchange, Hospital revenue ~~increased 2.9%~~decreased 3.4% during the three months ended June ~~29, 2019,~~27, 2020, as compared with the same period of fiscal ~~2019.~~2020. The ~~increase was primarily attributable to the growth of disposables associated with TEG~~^® diagnostic systems, principally in the U.S. and China. In May 2019, we received FDA clearance for the use of TEG 6s in adult trauma settings. This clearance builds on the current indication for the TEG 6s system in cardiovascular surgery and cardiology procedures, making it the first cartridge-based system available in the U.S. to evaluate the hemostasis condition in adult trauma patients. The increasedecrease during the three months ended June ~~29, 2019~~27, 2020 was primarily due to a decline in Cell Salvage and TEG disposables revenue due to the COVID-19 pandemic, partially offset by ~~declines due to the discontinuance of~~an increase in TEG equipment sales, ~~of our OrthoPAT products effective March 31, 2019.~~primarily in Europe.

~~Gross Profit~~

Three Months Ended
(In thousands) June 29,
2019 June 30,
2018 % Increase/
(Decrease)
Gross profit $ 115,906
$ 83,244
39.2 %
% of net revenues 48.6 % 36.3 %

~~Gross profit increased 39.2% for~~During the three months ended June ~~29, 2019,~~27, 2020, revenue in the Hospital business unit was negatively impacted by several COVID-19 related factors, such as procedure declines, the diversion of hospital resources to critical ICU needs and restricted access for sales teams. We experienced these declines primarily in China and the U.S., however, as the first quarter of fiscal 2021 progressed, we began to see some recovery in both markets as restrictions in China eased compared with the prior quarter and hospitals in the U.S. began to reopen. We believe that the demand for our hospital products is inherently strong and that procedure volumes will continue to improve sequentially quarter over quarter with a return to normal levels anticipated by the end of our fiscal year.

Gross Profit


	Three Months Ended
(In thousands)	June 27, 2020			June 29, 2019			% Increase/ (Decrease)
Gross profit	$	90,030		$	115,906		(22.3)	%
% of net revenues	46.0		%	48.6		%

Gross profit decreased 22.3% during the three months ended June 27, 2020, as compared with the same period of fiscal ~~2019.~~2020. Without the effect of foreign exchange, gross profit ~~increased 42.6% for~~decreased 20.5% during the three months ended June ~~29, 2019,~~27, 2020, as compared with the same period of fiscal ~~2019.~~2020. The ~~increase~~decrease in gross profit margin during the three months ended June ~~29, 2019~~27, 2020 was primarily ~~due to the absence of impairment charges which were incurred in the prior year period, favorable pricing~~ driven by increased costs associated with enhanced safety protocols within our manufacturing and supply chain operations and other operational costs incurred as a result of the ~~annualization of NexSys device conversions, increased volume~~COVID-19 pandemic as well as product mix. This decline was partially offset by lower depreciation expense and ~~incremental complexity reduction~~productivity savings infrom the ~~current year period.~~2020 Program.

Operating Expenses


	Three Months Ended
(In thousands)	June 27, 2020			June 29, 2019			% Increase/ (Decrease)
Research and development	$	7,750		$	7,487		3.5	%
% of net revenues	4.0		%	3.1		%
Selling, general and administrative	$	69,537		$	73,000		(4.7)	%
% of net revenues	35.6		%	30.6		%
Impairment of assets	$	1,028		$	48,721		100.0	%
% of net revenues	0.5		%	20.4		%
Total operating expenses	$	78,315		$	129,208		(39.4)	%
% of net revenues	40.0		%	54.2		%

Three Months Ended
(In thousands) June 29,
2019 June 30,
2018
% Increase/
(Decrease)
Research and development $ 7,487
$ 9,406
(20.4 )%
% of net revenues 3.1 % 4.1 %
Selling, general and administrative $ 73,000
$ 68,545
6.5 %
% of net revenues 30.6 % 29.9 %
Impairment of assets $ 48,721
$ —
100.0 %
% of net revenues 20.4 % — %
Total operating expenses $ 129,208
$ 77,951
65.8 %
% of net revenues 54.2 % 34.0 %

Research and Development

Research and development expenses ~~decreased 20.4% for~~increased 3.5% during the three months ended June ~~29, 2019,~~27, 2020, as compared with the same period of fiscal ~~2019.~~2020. Without the effect of foreign exchange, research and development expenses ~~decreased 20.1% for~~increased 4.3% during the three months ended June ~~29, 2019,~~27, 2020, as compared with the same period of fiscal ~~2019.~~2020. The ~~decrease~~increase during the three months ended June ~~29, 2019~~27, 2020 was ~~primarily~~ driven by restructuring and turnaround costs primarily related to the 2020 Program as well as investments ~~made~~ in ~~clinical programs during~~ the ~~prior year period in order to support FDA clearance for~~TEG portfolio. The increase was partially offset by cost savings associated with the ~~use of TEG 6s in adult trauma settings, which was received in May 2019.~~2020 Program.

Selling, General and Administrative

Selling, general and administrative expenses ~~increased 6.5% for~~decreased 4.7% during the three months ended June ~~29, 2019,~~27, 2020, as compared with the same period of fiscal ~~2019.~~2020. Without the effect of foreign exchange, selling, general, and administrative expenses ~~increased 7.9% for~~decreased 3.8% during the three months ended June ~~29, 2019,~~27, 2020, as compared with the same period of fiscal ~~2019.~~2020. The ~~increase for~~decrease during the three months ended June 27, 2020 was primarily due to cost containment actions taken to offset the negative effects related to the COVID-19 pandemic and incremental productivity savings from the 2020 Program. These decreases were partially offset by share-based compensation and continued investments, primarily in the Hospital business unit.

Impairment of assets

We recognized impairment charges of $1.0 million during the three months ended June 27, 2020 in connection with the sale of our Fajardo, Puerto Rico, manufacturing operations. During the three months ended June 29, 2019, ~~was primarily due to increased investments within our Plasma and Hospital business units and an increase in share-based compensation expense.~~

~~Impairment of assets~~

Wewe recognized ~~an impairment charge of~~ $48.7 million ~~for~~of impairment charges in connection with the ~~three months ended June 29, 2019 due to the transfer to CSL~~sale of ~~substantially all of our tangible assets related to the manufacture of anti-coagulant and saline at~~ our Union, South Carolina ~~facility to CSL.~~facility. Refer to Note 4,5, ~~Divestiture,~~Divestitures, to the Unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for additional information pertaining to ~~this agreement.~~these divestitures.

Interest and Other Expense, Net

Interest expense from our ~~Term Loan borrowings, which~~$350.0 million term loan and $350.0 million revolving loan constitutes the majority of ~~expense, increased by $1.3 million during~~our interest and other expenses. During the three months ended June ~~29, 2019, as compared~~27, 2020, our interest expense associated with this debt declined by $1.2 million despite higher loan borrowings in the ~~prior~~current year period due to ~~an increase in the term loan and revolving credit facility balance as well as an increase~~a decrease in the effective interest rate. The effective interest rate on total debt outstanding as of June ~~29, 2019~~27, 2020 was ~~3.8%~~1.4%.

Income Taxes

We conduct business globally and report our results of operations in a number of foreign jurisdictions in addition to the United States. Our reported tax rate is impacted by the jurisdictional mix of earnings in any given period as the foreign jurisdictions in which we operate have tax rates that differ from the U.S. statutory tax rate.

For the three months ended June 27, 2020, we reported an income tax benefit of $2.5 million, representing an effective tax rate benefit of 31.9%. The ~~Company's reported~~effective tax rate for the three months ended June 27, 2020 includes discrete tax benefits recognized from excess stock compensation deductions of $4.0 million. The effective tax rates were also impacted by the jurisdictional mix of earnings.

For the three months ended June 29, 2019, ~~was~~we reported an income tax benefit of $9.2 million, representing an effective tax rate of 52.2%. The effective tax rate for the three months ended June 29, 2019 iswas higher than the U.S. statutory tax rate primarily due to the jurisdictional mix of earnings, as well as the impact of the divestiture of the ~~plasma~~Union liquid solutions operation recorded in pretax income which resulted in a worldwide pretax loss for the quarter. The tax rate for the three months ended June 29, 2019 ~~also includes~~benefited from a discrete stock compensation windfall benefit of $4.9 million. ~~Refer to Note 4,~~

~~Divestiture~~ ~~for additional details related to the divestiture of the plasma liquid solutions operation~~.

Liquidity and Capital Resources

The following table contains certain key performance indicators we believe depict our liquidity and cash flow position:


(Dollars in thousands)	June 27, 2020		March 28, 2020
Cash & cash equivalents	$	275,725	$	137,311
Working capital	$	351,583	$	328,817
Current ratio	1.9		2.2
Net debt⁽¹⁾	$	(252,532)	$	(245,182)
Days sales outstanding (DSO)	65		62
Inventory turnover	1.2		1.7

(Dollars in thousands) June 29,
2019 March 30,
2019
Cash & cash equivalents $ 190,234
$ 169,351
Working capital $ 321,613
$ 340,362
Current ratio 2.1
2.4
Net debt⁽¹⁾
$ (245,458 ) $ (180,769 )
Days sales outstanding (DSO) 62
67
Inventory turnover 2.1
2.5

⁽¹⁾Net debt position is the sum of cash and cash equivalents less total debt.

In July 2019, ~~the~~our Board of Directors ~~of Haemonetics~~ approved ~~a new Operational Excellence Program (the "2020 Program").~~the 2020 Program. We estimate that we will incur aggregate charges between $60 million and $70 million in connection with the 2020 Program. These charges, the majority of which will result in cash outlays, including severance and other employee costs, will be incurred as the specific actions required to execute these initiatives are identified and approved and are expected to be substantially completed by the end of fiscal 2023. During the three months ended June 27, 2020, we incurred $3.5 million of restructuring and turnaround costs under this program.

Our primary sources of liquidity are cash and cash equivalents, internally generated cash flow from operations, our ~~Revolving Credit Facility~~revolving credit line and proceeds from employee stock option exercises. We believe these sources are sufficient to fund our cash requirements over at least the next twelve months. Our expected cash outlays relate primarily to investments, capital expenditures, including production of the NexSys PCS and Plasma plant capacity expansions, ~~share repurchases,~~ cash payments under the loan agreement and restructuring and turnaround initiatives.

As of June ~~29, 2019,~~27, 2020, we had ~~$190.2~~$275.7 million in cash and cash equivalents, the majority of which is held in the U.S. or in countries from which it can be repatriated to the U.S. On June 15, 2018, we entered into a ~~five year~~five-year credit agreement which provided for a $350.0 million ~~Term Loan~~term loan and a $350.0 million ~~Revolving Credit Facility.~~revolving loan (together with the term loan, the "Credit Facilities"). Interest on the ~~Credit Facilities~~term loan and revolving loan is established using LIBOR plus 1.13% - 1.75%, depending on our leverage ratio. Under the Credit Facilities, we are required to maintain certain leverage and interest coverage ratios specified in the credit agreement as well as other customary non-financial affirmative and negative covenants. At June ~~29, 2019, $332.5~~27, 2020, $319.4 million was outstanding under the ~~Term Loan and $105.0 million was outstanding on the Revolving Credit Facility, both,~~term loan with an effective interest rate of ~~3.8%.~~1.4% and $210.0 million was outstanding on the revolving credit line. In July 2020, we repaid $60.0 million of the outstanding balance on the revolving loan. We also had ~~$25.8~~$26.2 million of uncommitted operating lines of credit to fund our global operations under which there were no outstanding borrowings as of June ~~29, 2019.~~27, 2020.

We have scheduled principal payments of ~~$8.8~~$17.5 million required during the remainder of fiscal 2020. We were in compliance with the leverage and interest coverage ratios specified in the credit agreement as well as all other bank covenants as of June ~~29, 2019.~~27, 2020.

In May 2019, our Board of Directors authorized the repurchase of up to $500 million of Haemonetics common shares over the next two years. As of June 27, 2020, the total remaining authorization for repurchases of the Company's common stock under the share repurchase program was $325.0 million.

We continue to manage the ongoing impacts of the COVID-19 pandemic. While the duration and impacts of the pandemic remain uncertain, we have been successful in preserving cash by implementing a number of actions including restricting travel, reducing certain compensation-related items and non-essential spending and delaying hiring. We will continue to invest in our business with a bias towards organic growth and innovation that will continue to expand our commercial capabilities. Our commitment to our shareholders will continue to be an important element of our capital allocation strategy in fiscal 2021, however, our priority will be focused on providing the appropriate levels of funding across our organization and ensuring that we are well positioned to address any challenges that may arise over the course of the pandemic. As a result, we do not anticipate any share repurchases in the first half of fiscal 2021.

Cash Flows


	Three Months Ended
(In thousands)	June 27, 2020		June 29, 2019		Increase/ (Decrease)
Net cash provided by (used in):
Operating activities	$	11,812	$	2,628	$	9,184
Investing activities	(23,896)		1,861		(25,757)
Financing activities	148,951		16,090		132,861
Effect of exchange rate changes on cash and cash equivalents⁽¹⁾	1,547		304		1,243
Net change in cash and cash equivalents	$	138,414	$	20,883

Three Months Ended
(In thousands) June 29,
2019 June 30,
2018 Increase/
(Decrease)
Net cash provided by (used in):
Operating activities $ 2,628
$ 23,122
$ (20,494 )
Investing activities 1,861
(27,264 ) 29,125
Financing activities 16,090
18,663
(2,573 )
Effect of exchange rate changes on cash and cash equivalents⁽¹⁾
304
(2,584 ) 2,888
Net increase in cash and cash equivalents $ 20,883
$ 11,937

⁽¹⁾The balance sheet is affected by spot exchange rates used to translate local currency amounts into U.S. Dollars. In accordance with U.S. GAAP, we have removed the effect of foreign currency throughout our cash flow statement, except for its effect on our cash and cash equivalents.

Net cash provided by operating activities ~~decreased~~increased by ~~$20.5~~$9.2 million during the three months ended June ~~29, 2019,~~27, 2020, as compared with the three months ended June ~~30, 2018.~~29, 2019. The ~~decrease~~increase in cash provided by operating activities was primarily ~~due to a working capital outflow driven largely by~~the result of an increase in working capital as compared with the prior year period due to lower increases in inventory build, primarily related to ~~support the launch of the~~ NexSys PCS devices, a large payment to a key service provider in the prior year period and ~~a decrease~~increased collections of accounts receivable. The reduction in ~~accounts payable~~net income, as adjusted for depreciation, amortization and ~~accrued liabilities. The working capital outflow was~~other non-cash charges compared with the prior year period, partially offset ~~by a decrease in accounts receivable due to the timing of collections.~~this increase.

Net cash ~~provided by~~used in investing activities increased by ~~$29.1~~$25.8 million during the three months ended June ~~29, 2019,~~27, 2020, as compared with the three months ended June ~~30, 2018.~~29, 2019. The increase in cash ~~provided~~used in investing activities was primarily the result of ~~a decrease in capital expenditures in~~cash paid for the ~~current year period due to spend related to the NexSys PCS launch~~acquisition of enicor and ~~manufacturing capacity expansion projects in our Plasma business in the prior year period and the~~ proceeds received related to the divestiture of our plasma liquid solutions operations in the ~~current~~prior year period.

Net cash provided by financing activities ~~decreased~~increased by ~~$2.6~~$132.9 million during the three months ended June ~~29, 2019,~~27, 2020, as compared with the three months ended June ~~30, 2018,~~29, 2019, primarily due to ~~lower~~a decrease in share repurchases compared with the prior year period and an increase in borrowings on our revolving credit facility, net of ~~payments, on our Credit Facilities partially offset by lower share repurchases than the prior period.~~payments.

Concentration of Credit Risk

Concentrations of credit risk with respect to trade accounts receivable are generally limited due to our large number of customers and their diversity across many geographic areas. Certain markets and industries, however, can expose us to concentrations of credit risk. For example, in the Plasma business unit, sales are concentrated with several large customers. As a result, accounts receivable extended to any one of these biopharmaceutical customers can be significant at any point in time. In addition, a portion of our trade accounts receivable outside the U.S. include sales to government-owned or supported healthcare systems in several countries, which are subject to payment delays and local economic conditions. Payment is dependent upon the financial stability and creditworthiness of those countries' national economies.

We have not incurred significant losses on receivables. We continually evaluate all receivables for potential collection risks associated with the availability of government funding and reimbursement practices. If the financial condition of customers or the countries' healthcare systems deteriorate such that their ability to make payments is uncertain, allowances may be required in future periods.

Inflation

We do not believe that inflation had a significant impact on our results of operations for the periods presented. Historically, we believe we have been able to mitigate the effects of inflation by improving our manufacturing and purchasing efficiencies, by increasing employee productivity and by adjusting the selling prices of products. We continue to monitor inflation pressures generally and raw materials indices that may affect our procurement and production costs. Increases in the price of petroleum derivatives could result in corresponding increases in our costs to procure plastic raw materials.

Foreign Exchange

During the three months ended June ~~29, 2019, 34.4%~~27, 2020, 43.2% of our sales were generated outside the U.S., generally in foreign currencies, yet our reporting currency is the U.S. Dollar. We also incur certain manufacturing, marketing and selling costs in international markets in local currency. Our primary foreign currency exposures relate to sales denominated in Euro, Japanese Yen, Chinese Yuan and Australian Dollars. We also have foreign currency exposure related to manufacturing and other operational costs denominated in Swiss Francs, Canadian Dollars, Mexican Pesos and Malaysian Ringgit. The Yen, Euro, Yuan and Australian Dollar sales exposure is partially mitigated by costs and expenses for foreign operations and sourcing products denominated in foreign currencies.

Since our foreign currency denominated Yen, Euro, Yuan and Australian Dollar sales exceed the foreign currency denominated costs, whenever the U.S. Dollar strengthens relative to the Yen, Euro, Yuan or Australian Dollar, there is an adverse effect on our results of operations and, conversely, whenever the U.S. Dollar weakens relative to the Yen, Euro, Yuan or Australian Dollar, there is a positive effect on our results of operations. For Swiss Francs, Canadian Dollars Mexican Pesos and Malaysian Ringgit our primary cash flows relate to product costs or costs and expenses of local operations. Whenever the U.S. Dollar strengthens relative to these foreign currencies, there is a positive effect on our results of operations. Conversely, whenever the U.S. Dollar weakens relative to these currencies, there is an adverse effect on our results of operations.

We have a program in place that is designed to mitigate our exposure to changes in foreign currency exchange rates. That program includes the use of derivative financial instruments to minimize, for a period of time, the unforeseen impact on our

financial results from changes in foreign exchange rates. We utilize forward foreign currency contracts to hedge the anticipated cash flows from transactions denominated in foreign currencies, primarily Japanese Yen and Euro, and to a lesser extent Swiss Francs, Australian Dollars, Canadian Dollars and Mexican Pesos. This does not eliminate the volatility of foreign exchange rates, but because we generally enter into forward contracts one year out, rates are fixed for a one-year period, thereby facilitating financial planning and resource allocation. These contracts are designated as cash flow hedges. The final impact of currency fluctuations on the results of operations is dependent on the local currency amounts hedged and the actual local currency results.

Recent Accounting Pronouncements

Standards to be Implemented

In ~~June 2016,~~December 2019, the ~~FASB~~Financial Accounting Standards Board ("FASB") issued Accounting Standards Codification ("ASC") Update No. 2019-12, Income Taxes (Topic 740). The new guidance will improve consistent application of and simplify the accounting for income taxes by removing certain exceptions to the general principals in Topic 740. ASC Update No. 2016-13, Financial Instruments – Credit Losses (Topic 326). ASC Update No. 2016-13 is to intended to replace the current incurred loss impairment methodology for financial assets measured at amortized cost with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information, including forecasted information, to develop credit loss estimates. ASC Update No. 2016-132019-12 is effective for annual periods beginning after December 15, ~~2019,~~2020, and is applicable to us in fiscal ~~2021.~~2022. We are in the process of determining the effect that the adoption will have on our financial position and results of operations.

In August 2018, the FASB issued ASC Update No. 2018-15, Intangibles, Goodwill and Other - Internal-Use Software (Subtopic 350-40). The new guidance will align the accounting implementation costs incurred in a cloud computing arrangement that is a service contract with the accounting for internal-use software licenses. The guidance is effective for annual periods beginning after December 15, 2019 and is applicable to us in fiscal 2021. Early adoption is permitted for all entities, including interim periods. The impact of adopting ASC Update No. 2018-15 is not expected to have a material effect on our consolidated financial statements.

Cautionary Statement Regarding Forward-Looking Information

Certain statements that we make from time to time, including statements contained in this Quarterly Report on Form 10-Q and incorporated by reference into this report, constitute “forward looking-statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements do not relate strictly to historical or current facts and reflect management’s assumptions, views, plans, objectives and projections about the future. Forward-looking statements may be identified by the use of words such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “potential” and other words of similar meaning in conjunction with, among other things: discussions of future operations; expected operating results and financial performance; impacts of the COVID-19 pandemic; the Company’s strategy for growth; product development, commercialization and anticipated performance and benefits; regulatory approvals; ~~the impact and timing of restructuring initiatives including associated cost savings and other benefits;~~ impact of planned acquisitions or dispositions; market position and expenditures.

Because forward-looking statements are based on current beliefs, expectations and assumptions regarding future events, they are subject to uncertainties, risks and changes that are difficult to predict and many of which are outside of the Company's control. Investors should realize that if underlying assumptions prove inaccurate, or known or unknown risks or uncertainties materialize, the Company’s actual results and financial condition could vary materially from expectations and projections expressed or implied in its forward-looking statements. Investors are therefore cautioned not to rely on these forward-looking statements.

~~Set forth below~~The following are some important factors that could cause our actual results to differ from our expectations in any forward-looking statements. For further discussion of these and other factors, see ~~Part I,~~ Item 1A. Risk Factors in our most recent Annual Report on Form 10-K.

•The effect of the ongoing COVID-19 pandemic, or outbreaks of communicable diseases, on our business, financial conditions and results of operations, which may be heightened if the pandemic and various government responses to it continue for an extended period of time;

•Failure to achieve our long-term strategic and financial-improvement goals;

•Demand for and market acceptance risks for new and existing products, including material reductions in purchasing from or loss of a significant customer;

•Product quality or safety concerns, leading to product recalls, withdrawals, regulatory action by the FDA (or similar non-U.S. regulatory agencies), reputational damage, declining sales or litigation;

•Security breaches of our information technology systems or our products, which could impair our ability to conduct business or compromise sensitive information of the Company or its customers, suppliers and other business partners, or of customers' ~~patients and donors;~~patients;

•Pricing pressures resulting from trends toward health care cost containment, including the continued consolidation among health care providers and other market participants;

•The continuity, availability and pricing of plastic and other raw materials, finished goods and components used in the manufacturing of our products (including those purchased from sole-source suppliers) and the related continuity of our manufacturing and distribution;

•Our ability to develop new products or enhancements on commercially acceptable terms or at all;

•Our ability to obtain the anticipated benefits of restructuring programs that we have or may undertake, including the Operational Excellence Program;

•The potential that the expected strategic benefits and opportunities from any planned or completed acquisition or divestiture by the Company may not be realized or may take longer to realize than expected;

~~Our ability~~

•The impact of enhanced requirements to obtain regulatory ~~approvals~~approval in ~~a timely manner consistent with~~the U.S. and around the world, including the EU MDR and the associated timing and cost ~~estimates;~~of product approval, and

•Our ability to comply with established and developing U.S. and foreign legal and regulatory requirements, including the U.S. Foreign Corrupt Practices Act, or FCPA, and similar laws in other jurisdictions, as well as U.S. and foreign export and import restrictions and tariffs;

•Our ability to execute and realize anticipated benefits from our investments in emerging economies;

~~Our ability to obtain the anticipated benefits of restructuring programs that we have or may undertake, including the 2020 Program and 2018 Program;~~

•Our ability to retain and attract key personnel;

•Costs and risks associated with product liability and other litigation claims;

•Our ability to meet our existing debt obligations and raise additional capital when ~~desired~~desire on terms reasonably acceptable to us;

•The potential effect of foreign currency fluctuations and interest rate fluctuations on our net sales, expenses, and resulting margins;

•The impact of changes in U.S. and international tax laws;

•Market conditions impacting our stock price and/or share repurchase program, and the possibility that ~~the Company’s~~our share repurchase program may be delayed, suspended or discontinued; and

~~The effect of communicable diseases on demand for our products; and~~

•Our ability to protect intellectual property and the outcome of patent litigation.

Investors should understand that it is not possible to predict or identify all such factors and should not consider the risks described above and in ~~our Part I,~~ Item 1A. Risk Factorsin our Annual Report on Form 10-K to be a complete statement of all potential risks and uncertainties. The Company does not undertake to publicly update any forward-looking statement that may be made from time to time, whether as a result of new information or future events or developments.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure relative to market risk is due to foreign exchange risk and interest rate risk.

Foreign Exchange Risk

See the section above entitled Foreign Exchange for a discussion of how foreign currency affects our business. It is our policy to minimize, for a period of time, the unforeseen impact on our financial results of fluctuations in foreign exchange rates by using derivative financial instruments known as forward contracts to hedge anticipated cash flows from forecasted foreign currency denominated sales and costs. We do not use the financial instruments for speculative or trading activities.

We estimate the change in the fair value of all forward contracts assuming both a 10% strengthening and weakening of the U.S. Dollar relative to all other major currencies. In the event of a 10% strengthening of the U.S. Dollar, the change in fair value of all forward contracts would result in a ~~$8.9~~$15.5 million increase in the fair value of the forward contracts; whereas a 10% weakening of the U.S. Dollar would result in a ~~$9.7~~$17.1 million decrease of the fair value of the forward contracts.

Interest Rate Risk

Our exposure to changes in interest rates is associated with borrowings under our ~~Credit Facilities,~~term loan and revolving credit facility (together "Credit Facilities"), all of which is variable rate debt. Total outstanding debt under our Credit Facilities as of June ~~29, 2019~~27, 2020 was ~~$332.5~~$319.4 million with an interest rate of ~~3.8%~~1.4% based on prevailing LIBOR rates. An increase of 100 basis points in LIBOR rates would result in additional annual interest expense of ~~$3.3~~$1.0 million. On August 21, 2018, we entered into two interest rate swap agreements to effectively convert $241.9 million of borrowings under our Credit Facilities from a variable rate to a fixed rate. These interest rate swaps are intended to mitigate the exposure to fluctuations in interest rates and qualify for hedge accounting treatment as cash flow hedges.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We conducted an evaluation, as of June ~~29, 2019,~~27, 2020, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively) regarding the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15 of the ~~Securities~~ Exchange ~~Act of 1934 (the “Exchange Act”).~~Act. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective as of June ~~29, 2019.~~27, 2020.

Changes in Internal Control Over Financial Reporting

We implemented certain controls related to the adoption of FASB ASC Topic 842, effective March 31, 2019. These controls were designed and implemented to ensure the completeness and accuracy over financial reporting. With the exception of the controls implemented for FASB ASC Topic 842, thereThere were no changes in our internal control over financial reporting during the three months ended June ~~29, 2019~~27, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

Information with respect to this Item may be found in Note ~~14,~~13, Commitments and Contingencies to the Unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

Item 1A. Risk Factors

There are no material changes from the Risk Factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended March ~~30, 2019.~~28, 2020.

Item 2. Issuer Purchases of Equity Securities

~~The following table provides information on~~In May 2019, our Board of Directors authorized the ~~Company’s~~repurchase of up to $500 million of Haemonetics common shares over the next two years. We had no share repurchases during the ~~first quarter~~three months ended June 27, 2020. The total remaining authorization for repurchases of ~~fiscal 2020:~~our common stock under the share repurchase program was $325 million as of June 27, 2020.

Total
Number of Shares
Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program⁽¹⁾
March 31, 2019 - April 27, 2019
April 28, 2019 - May 25, 2019

May 26, 2019 - June 29, 2019 615,700

⁽²⁾
615,700

Total 615,700
$425,000,000

⁽¹⁾ In May 2019, the Company announced that the Board of Directors had authorized the repurchase of up to $500 million of the Company’s common stock from time to time, based on market conditions, over the next two years. Under the Company's share repurchase program, shares may be repurchased in accordance with applicable laws both on the open market, including under trading plans established pursuant to Rule 10b5-1 under the Exchange Act, and in privately negotiated transactions.
⁽²⁾ In early June 2019, the Company entered into an accelerated share repurchase agreement ("ASR") with Citibank N.A. ("Citibank") to repurchase approximately $75.0 million of the Company’s common stock. Pursuant to the terms of the ASR, in June 2019, the Company paid Citibank $75.0 million in cash and received an initial delivery of approximately 0.6 million shares of Haemonetics common stock based on a closing market price of the Company's common stock on the New York Stock Exchange on June 3, 2019 of $97.45. This initial delivery of shares represented approximately 80% of the notional amount of the ASR. On July 30, 2019, the ASR was completed and an additional 29,018 shares were delivered upon settlement. The total number of shares repurchased under the ASR was approximately 0.6 million at an average price per share upon final settlement of $116.33.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits



~~3.1~~















~~Restated Articles of Organization~~3.1		By-Laws of the Company, ~~reflecting Articles of Amendment dated August 23,~~ ~~1993, August 21, 2006, July 26, 2018 and July 25, 2019~~as amended through June 29, 2020 (filed as Exhibit 3.1 to the Company’s Form 8-K dated ~~July 29, 2019 and incorporated herein by reference).~~

~~3.2~~	~~By-Laws of the Company, as amended through July 25, 2019 (filed as Exhibit 3.3 to the Company’s Form 8-K dated July 29, 2019~~June 30, 2020 and incorporated herein by reference).

~~10.1†~~10.1			~~Form~~Industrial Lease Agreement, dated as of ~~Performance Share Unit Agreement with Employees Under 2005 Long-Term Incentive Compensation Plan (rTSR Metrics, adopted fiscal 2020) (filed as Exhibit 10AV to~~May 22, 2020, by and between Clinton Commerce III, LLC and the ~~Company's Form 10-K, for the year ended March 30, 2019)~~Company*.

~~10.2†~~31.1			Haemonetics Corporation Worldwide Employee Bonus Plan (as amended and restated effective April 23, 2019) (filed as Exhibit 10.1 to the Company's Form 8-K dated April 29, 2019 and incorporated herein by reference).

~~31.1~~	Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002, of Christopher A. Simon, President and Chief Executive Officer of the Company.

31.2			Certification pursuant to Section 302 of Sarbanes-Oxley of 2002, of William Burke, Executive Vice President, Chief Financial Officer of the Company.

32.1			Certification Pursuant to 18 United States Code Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Christopher A. Simon, President and Chief Executive Officer of the Company.

32.2			Certification Pursuant to 18 United States Code Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of William Burke, Executive Vice President, Chief Financial Officer of the Company.

101**			The following materials from Haemonetics Corporation on Form 10-Q for the quarter ended June ~~29, 2019,~~27, 2020, formatted in inline Extensible Business Reporting Language (XBRL) includes: (i) Condensed Consolidated Statements of Income and Comprehensive Income, (ii) Condensed Consolidated Balance Sheets, (iii) Condensed Consolidated Statements of Cash Flows, and (iv) Notes to Condensed Consolidated Financial Statements.

104		Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101).

_____________________________



†						~~Agreement, plan, or arrangement related to the compensation of officers or directors.~~
*						Certain portions of this exhibit are considered confidential and have been omitted as permitted under SEC rules and regulations.

**						In accordance with Rule 406T of Regulation S-T, the XBRL-related information in Exhibit 101 to this Form 10-Q is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act, is deemed not filed for the purposes of section 18 of the Exchange Act, and otherwise is not subject to liability under these sections.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

HAEMONETICS CORPORATION

August 4, 2020

By:

/s/ Christopher A. Simon

Christopher A. Simon,
President and Chief Executive Officer

(Principal Executive Officer)

August 4, 2020

~~HAEMONETICS CORPORATION~~By:

~~August 6, 2019~~

~~By:~~

~~/s/ Christopher A. Simon~~

~~Christopher A. Simon,~~

~~President and Chief Executive Officer~~

~~(Principal Executive Officer)~~

~~August 6, 2019~~

~~By:~~

/s/ William Burke

William Burke, Executive Vice President, Chief Financial Officer

(Principal Financial Officer)



	June 29, 2019			March 30, 2019
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	190,234		$	169,351
Accounts receivable, less allowance of $3,624 at June 29, 2019 and $3,937 at March 30, 2019	163,339			185,027
Inventories, net	221,953			194,337
Prepaid expenses and other current assets	39,752			27,406
Total current assets	615,278			576,121
Property, plant and equipment, net	276,748			343,979
Intangible assets, less accumulated amortization of $271,769 at June 29, 2019 and $263,479 at March 30, 2019	120,340			127,693
Goodwill	211,140			210,819
Deferred tax asset	4,622			4,359
Other long-term assets	31,482			11,796
Total assets	$	1,259,610		$	1,274,767
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable and current maturities of long-term debt	$	117,548		$	27,666
Accounts payable	60,792			63,361
Accrued payroll and related costs	31,352			53,200
Other liabilities	83,973			91,532
Total current liabilities	293,665			235,759
Long-term debt, net of current maturities	318,144			322,454
Deferred tax liability	14,006			19,906
Other long-term liabilities	42,829			28,780
Total stockholders’ equity
Common stock, $0.01 par value; Authorized — 150,000,000 shares; Issued and outstanding — 50,771,013 shares at June 29, 2019 and 51,019,918 shares at March 30, 2019	508			510
Additional paid-in capital	525,038			536,320
Retained earnings	99,418			161,418
Accumulated other comprehensive loss	(33,998		)	(30,380		)
Total stockholders’ equity	590,966			667,868
Total liabilities and stockholders’ equity	$	1,259,610		$	1,274,767



(In thousands)	2018 Program and Prior Programs
Balance at March 30, 2019	$	7,479
Costs incurred, net of reversals	969
Payments	(3,206		)
Balance at June 29, 2019	$	5,242



(In thousands)	Three months ended June 29, 2019
Cash paid for amounts included in the measurement of operating lease liabilities
Operating cash flows from operating leases	$	2,051



Fiscal Year (in thousands)	Operating Leases
2020 (excluding the first quarter of 2020)	$	4,989
2021	5,828
2022	4,229
2023	3,288
2024	1,856
Thereafter	3,594
Total future minimum operating lease payments	23,784
Less: imputed interest	(2,937		)
Present value of operating lease liabilities	$	20,847



(In thousands)	Location in Balance Sheet	As of		As of
(In thousands)	Location in Balance Sheet	June 29, 2019		March 30, 2019
Derivative Assets:
Designated foreign currency hedge contracts	Other current assets	$	550	$	1,208
Non-designated foreign currency hedge contracts	Other current assets	41		69
		$	591	$	1,277
Derivative Liabilities:
Designated foreign currency hedge contracts	Other current liabilities	$	585	$	145
Non-designated foreign currency hedge contracts	Other current liabilities	436		—
Designated interest rate swaps	Other current liabilities	9,071		5,203
		$	10,092	$	5,348



	As of June 29, 2019
(In thousands)	Level 1		Level 2		Total
Assets
Money market funds	$	35,506	$	—	$	35,506
Designated foreign currency hedge contracts	—		550		550
Non-designated foreign currency hedge contracts	—		41		41
	$	35,506	$	591	$	36,097
Liabilities
Designated foreign currency hedge contracts	$	—	$	585	$	585
Non-designated foreign currency hedge contracts	—		436		436
Designated interest rate swaps	—		9,071		9,071
	$	—	$	10,092	$	10,092

	As of March 30, 2019
	Level 1		Level 2		Total
Assets
Money market funds	$	36,980	$	—	$	36,980
Designated foreign currency hedge contracts	—		1,208		1,208
Non-designated foreign currency hedge contracts	—		69		69
	$	36,980	$	1,277	$	38,257
Liabilities
Designated foreign currency hedge contracts	$	—	$	145	$	145
Designated interest rate swaps	$	—	$	5,203	$	5,203
	$	—	$	5,348	$	5,348



	Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Program	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program⁽¹⁾
March 31, 2019 - April 27, 2019
April 28, 2019 - May 25, 2019
May 26, 2019 - June 29, 2019	615,700	⁽²⁾	615,700
Total	615,700			$425,000,000

⁽¹⁾ In May 2019, the Company announced that the Board of Directors had authorized the repurchase of up to $500 million of the Company’s common stock from time to time, based on market conditions, over the next two years. Under the Company's share repurchase program, shares may be repurchased in accordance with applicable laws both on the open market, including under trading plans established pursuant to Rule 10b5-1 under the Exchange Act, and in privately negotiated transactions.
⁽²⁾ In early June 2019, the Company entered into an accelerated share repurchase agreement ("ASR") with Citibank N.A. ("Citibank") to repurchase approximately $75.0 million of the Company’s common stock. Pursuant to the terms of the ASR, in June 2019, the Company paid Citibank $75.0 million in cash and received an initial delivery of approximately 0.6 million shares of Haemonetics common stock based on a closing market price of the Company's common stock on the New York Stock Exchange on June 3, 2019 of $97.45. This initial delivery of shares represented approximately 80% of the notional amount of the ASR. On July 30, 2019, the ASR was completed and an additional 29,018 shares were delivered upon settlement. The total number of shares repurchased under the ASR was approximately 0.6 million at an average price per share upon final settlement of $116.33.